June 27, 2007

 

CBOT Corn Outlook on Wednesday: Steady-1 cents higher on consolidation, wheat

 

 

Chicago Board of Trade corn futures are expected to begin trading steady to 1 cent higher Wednesday, underpinned by position evening and consolidation ahead of Friday's acreage and stocks reports, analyst said.

 

In overnight electronic trading, July corn rose 1 cent to US$3.57 1/2 per bushel, September ended up 3/4 cent at US$3.67 3/4 and December finished unchanged at US$3.75. E-CBOT volume in December was 9,254 contracts.

 

Corn could see some evening up of positions ahead of the reports due out on Friday and ideas recent losses were overdone and due for a correction, an analyst said. However, near-term weather remains favorable for crop development and next week's forecasts have reduced the amount of heat expected in earlier outlooks, he added.

 

Planted corn acreage in 2007 is estimated at 90.585 million acres, according to a survey of 20 analysts by Dow Jones Newswires. This compares to the 90.454 million acres the U.S. Department of Agriculture estimated in March and sharply higher than the 78.327 million planted in 2006.

 

Quarterly corn stocks as of June 1 are projected at 3.467 billion bushels, according to a survey of analysts, lower than the 4.362 billion in June, 2006.

 

Corn should be lower given the weather, but will be supported by ideas that wheat will open with good gains, providing support for the rest of the floor, another analyst said. Wheat was higher in overnight trade, extending Tuesday's sharp rally on production concerns and export activity.

 

In the western U.S. Midwest, there is a chance for afternoon thundershowers Wednesday with amounts of 0.10-0.50 inch and locally heavier for southeast Iowa and northern Missouri. Thunderstorms with amounts of 0.25-1.00 inch and locally heavier are expected in central Missouri on Thursday, DTN Meteorologix Weather said. Temperatures are expected to average near- to below-normal in this period.

 

In the eastern U.S. Midwest, possible isolated or widely scattered afternoon thundershowers are possible Wednesday extending into Thursday with amounts of 0.25-1.00 inch and locally heavier, in central and south locations, Meteorologix Weather said. Temperatures are expected to average above normal Wednesday but cooler on Thursday and Friday.

 

In the 6- to 10-day outlook, temperatures are expected to above normal early in the period and below normal later in the period. Rainfall is predicted near-to-below normal.

 

On daily technical charts serious chart damage has occurred in December corn suggesting a market top is in place, a technical analyst said. However, weather markets can repair chart damage very quickly, the analyst added. In addition, the market is oversold technically and due for a corrective bounce, he said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.95 per bushel, which would fill on the upside last week's downside price gap on daily technical charts. The bear's next downside objective is closing prices below solid chart support at this week's low of US$3.73.

 

First resistance for December corn is seen at US$3.80 and then at US$3.82. First support is seen Monday's low of US$3.73 and then at US$3.70.

 

In other corn news, cash corn prices in China were steady in the week ended Wednesday, analysts said. Strong growth in industrial consumption is seen tightening supplies with corn prices expected to climb when feed meal demand increases, analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled weaker with the benchmark January contract down RMB19 at RMB1,565 per metric tonne.