June 28, 2007
CBOT Corn Outlook on Thursday: Up 1-2 cents on position squaring before USDA reports
Chicago Board of Trade corn futures are predicted to begin trading 1 to 2 cents higher Thursday as participants are expected to even up positions after the recent sharp decline in prices as well as Friday's acreage and stocks reports, analysts said.
In overnight electronic trading, July corn gained 2 cents to US$3.45 3/4 per bushel, September rose 1 1/4 cents at US$3.55 and December finished 1 cent higher at US$3.63. E-CBOT volume in December was 6,288 contracts.
The market should be higher ahead of the U.S. Department of Agriculture acreage and stocks reports, as well as the steep losses corn has experienced recently, an analyst said.
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.
Weekly corn export sales were near the high end of the range expected by the trade and might also supply some support to prices, the analyst added.
The USDA reported that corn export sales for the week ended June 21 were 988,900 metric tonnes, within the 550,000-1.1 million tonnes forecasts. Included in the total were sales of 226,100 tonnes for delivery in the 2007-08 crop year.
Corn futures have sold off sharply over the past two weeks as the U.S. Midwestern weather pattern has changed and the market could be overdone to the downside and due for some position squaring, a trader said. However, the weather over the next 10 days is non-threatening and that could limit the upside, the trader said.
In the western U.S. Midwest, mainly dry weather is forecast for Friday and Saturday with only a few thundershowers possible Sunday in far northern areas on Sunday, DTN Meteorologix Weather said. Temperatures are expected to average below normal Friday and near-to-below normal Saturday.
In the eastern U.S. Midwest, dry weather is expected Friday though showers may linger near the Ohio river early. Mainly dry weather is forecast for Saturday, Meteorologix Weather said. Temperatures are forecast to average below normal Friday and Saturday.
In the 6- to 10-day outlook, temperatures are expected to average above normal early in the period and near-to-below normal later. Rainfall is predicted near-to-below normal.
On daily technical charts, December corn hit a fresh 6-week low on fund selling and long liquidation as weather forecasts calling for additional rain and moderate temperatures were also bearish, a technical analyst said. Although serious near-term technical damage has occurred, corn could be overdone on the downside and there may not be much additional downside potential left, the analyst said. However, the upside will be limited if the weather remains favorable, he added.
The bulls' next upside price objective is closing prices above solid resistance at US$3.75 per bushel, with the bears' next downside price objective closing prices below solid support at the May low of US$3.56 per bushel.
In other corn news, the Philippines is targeting growth in corn production at 8%-10% over the next three years in an attempt to achieve self-sufficiency in corn by 2010, a senior official said Thursday. In 2007, the Philippine government has set a production target of 6.9 million metric tonnes, up 13% from 2006.
Ethanol production in China is expected to be 2 million metric tonnes by 2010 and all of the increased production capacity will be based non-grain feedstock, a government official said Thursday. Ethanol production is expected to reach 1.32 million tonnes in 2007.
Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB4 at RMB1,561 per metric tonne.
