June 9, 2006

 

CBOT Corn Outlook on Friday: 1-2 cents higher on supportive USDA report

 

 

Corn futures at the Chicago Board of Trade are expected to begin trading 1-2 cents higher Friday as supportive ending stocks data in the supply and demand report released by the U.S. Department of Agriculture and higher outside markets are expected to provide support to prices, sources said.

 

In overnight e-CBOT trading, July corn rose 3/4 cent to US$2.46 1/4 per bushel and December gained 1 cent to US$2.72.

 

"The surprise in the reports was the reduction in the old crop corn ending stocks by 50 million bushels due to an increase in exports by 50 million bushels," said Brian Hoops, president of Midwest marketing in Yankton, South Dakota. "That led in turn to lower new crop ending stocks as well," he said.

 

The USDA reduced 2005-06 ending stocks by 50 million bushels to 2.176 billion bushes as it increased its export projection by 50 million bushels. This decline carried over into the new crop ending stocks figure with the USDA reducing it by 50 million bushels to 1.091 billion.

 

The average analyst estimate called for a reduction in 2005-06 ending stocks by 22 million bushels to 2.204 billion and an 80 million bushel increase in 2006-07 ending stocks to 1.221 billion from the USDA's May estimate of 1.141 billion.

 

The market will focus on the report for 10-15 minutes, and then the focus will shift to the weather. The outside markets are higher and there could be some position squaring ahead of the weekend and after the recent price weakness, a commission house analyst said.

 

Although two long range weather models do not agree, the near term weather is perfect, he added.

 

Scattered showers are expected Saturday before turning drier Sunday in the western U.S. Midwest, DTN Meteorologix Weather said. Dry or only a few light showers are forecast for Monday and Tuesday. In the 6-10 day forecast, temperatures are expected to average near-to-above normal and precipitation near to above normal.

 

In the eastern U.S. Midwest, scattered showers and thundershowers are possible Saturday into Sunday, DTN Meteorologix Weather said, with the heaviest of these expected in southern and central locations. Mainly dry weather is expected Monday. In the 6-to-10 day outlook, temperatures are expected to average near to below normal and rainfall near to below normal, DTN Meteorologix Weather said.

 

Cash corn basis bids were unchanged to mostly higher Friday. Peoria, Ill., was up 1 cent at 20 cents under the July future.

 

On technical charts, a weekly low close in July corn would be bearish and give bears fresh downside technical momentum, a technical analyst said. He sees first resistance for July corn at US$2.48 1/2, Thursday's high and then at US$2.50. First support is seen at US$2.44 1/2, this week's low and then at US$2.42.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled mostly lower with the March 2007 contract falling RMB/14 to RMB1,496/tonne.