May 12, 2006

 

CBOT Corn Outlook on Friday: Sharply higher on ending stocks data

 

 

Corn futures at the Chicago Board of Trade are forecast to begin pit trading 8-10 cents higher Friday after the U.S. Department of Agriculture released its 2006-07 supply and demand ending stocks data, which was well below analysts estimates.

 

In pre-report overnight e-CBOT trading, July corn gained 3/4 cent to US$2.47 3/4 per bushel and December corn rose 1 cent to US$2.72 1/4.

 

The USDA estimated 2006-07 corn ending stocks at 1.141 billion bushels, below the average analyst estimate of 1.582 billion bushels and the 2005-06 ending stocks figure of 2.226 billion bushels.

 

"I think the trade is in a shock. The country may not be so surprised, as we have almost a 70-cent premium built into new-crop corn prices. The drop on the U.S. 2006-07 corn ending stocks and the world ending stocks (corn) look to be tight," said Jason Roose of US Commodities in West Des Moines, Iowa.

 

The USDA estimated 2006-07 world corn ending stocks at 92.3 million metric tonnes, sharply lower than the 2005-06 ending stocks of 129.31 million tonnes.

 

This means the U.S. has to grow a lot of corn this year, a floor trader said.

 

The number is bullish, but remember it is still early in the growing season, a commission house analyst said.

 

In the western U.S. Midwest dry conditions with just a little light rain is expected favoring the eastern areas through Tuesday, DTN Meteorologix Weather said.

 

The eastern U.S. Midwest is forecast to receive light rain and drizzle through Sunday with rain expected on Monday with amounts of .10-.50 expected.

 

Temperature readings in the eastern region are expected to be below to much below normal for the period, DTN Meteorologix Weather said.

 

Deliveries posted against the May contract were 1,544 contracts. Issuers included the customer account of Man Financial, which issued 637 contracts, the customer account of Dowd Wescott, which issued 266 contracts and the customer account of SAK II, which issued 171 contracts.

 

Stoppers included the customer account of Man Financial, which stopped 377 contracts, the Dowd Wescott Group, which stopped 422 contracts and the house account of Tenco, which stopped 227 contracts.

 

On technical charts, bulls gained some good upside momentum Thursday as July closed near its session high, a technical analyst said. It will take a close above US$2.50 to provide bulls with better upside momentum, he added. First resistance for July is seen at US$2.47 1/2 and then at US$2.50. First support is seen at US$2.45 and then at US$2.42 1/4.

 

In other corn news, China exported 40,000 metric tonnes of corn in April, down sharply from the 529,075 tonnes exported in April 2005. Overall corn exports from January to April were 2.24 million tonnes, down 0.2% on the year the Chinese General Administration of Customs department said Friday.

 

Corn futures on China's Dalian Commodities Exchange settled mixed, with the January contract ending RMB/3 higher at RMB 1,477/tonne.