May 10, 2007

 

CBOT Corn Outlook on Thursday: Up 1/2-1 cent on short covering before USDA

 

 

Chicago Board of Trade corn futures are predicted to begin trading 1/2-1 cent higher Thursday as market participants square up positions ahead of Friday's U.S. Department of Agriculture reports, floor analysts said.

 

In overnight electronic trading, May corn gained 1/2 cent to US$3.57 3/4 per bushel, July rose 1/4 cent to US$3.66 1/2 and December gained 1 cent to US$3.67. E-CBOT volume in July was 2,851 contracts.

 

Corn should trade steady ahead of Friday's USDA supply and demand reports and with some short covering after this week's sharp sell off, a floor analyst said.

 

In a Dow Jones Newswires survey the average of 15 analysts pegged 2006-07 corn ending stocks at 878 million bushels, almost unchanged from the 877 million estimated by the USDA in April.

 

The average of 14 analysts surveyed estimate 2007-08 ending stocks at 1.058 billion bushels.

 

The market should see some position squaring but the weather remains favorable for planting and weekly export sales were below analyst expectations which could limit the upside, a floor trader said.

 

The USDA reported weekly corn export sales for the week ended May 3 totaled 543,300 metric tonnes, below the 550,000-900,000 tonnes expected by analysts. Included in the total were sales of 19,300 tonnes for delivery in the 2007-08 marketing year.

 

Japan and Taiwan were the largest buyers on the week.

 

In the western U.S. Midwest mainly dry weather is forecast for Friday with dry weather or only a few light showers expected on Saturday, DTN Meteorologix Weather said. Temperatures are expected to average above normal Friday and near-to-above normal Saturday.

 

In the eastern U.S. Midwest, there is a chance for scattered light showers in southern areas on Friday with dry weather or only a few light showers possible Saturday, Meteorologix Weather said. Temperatures are expected to average above normal Friday and near-to-above normal Saturday.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal west and near-to-below normal east, with rainfall near-to-above normal west and near-to-below east, Meteorologix Weather said.

 

On daily technical charts, July hit a fresh three-week low Wednesday, but closed nearer the session high. Bulls are struggling but there is strong technical support at the April low of US$3.55 1/2, with strong resistance at US$4.00 per bushel, a technical analyst said. Bulls would regain some upside technical momentum by pushing prices above US$3.77, while the bears' next downside objective is closing prices below US$3.61.

 

First resistance for July is seen at US$3.67 3/4, then at US$3.70. First support is seen at US$3.61 and then at US$3.55 1/2.

 

Deliveries posted against the May future were 1,448 contracts. Large issuers included the customer account of Man Professional Clearing, which issued 390 contracts and the customer account of Kottke, which issued 236 contracts. Large stoppers included the customer account of RJ O'Brien, which stopped 641 contracts, and the customer account of Man Professional Clearing, which stopped 281 contracts. The last trade assigned was May 9. Preliminary open interest in May is 2,775 contracts.

 

In other corn news, the USDA announced this morning that Japan bought 284,480 metric tonnes of U.S. corn, and that South Korea bought 550,000 tonnes of U.S. corn for delivery in the 2006-07 marketing year.

 

Corn futures on China's Dalian Commodities Exchange settled mixed with the benchmark September contract up RMB1 at RMB1,674 per metric tonne.