June 29, 2007

 

CBOT Corn Outlook on Friday: 5 cents Higher-5 cents lower after acreage report

 

 

Chicago Board of Trade corn futures are predicted to begin trading anywhere from 5 cents higher to 5 cents lower Friday after the U.S. Department of Agriculture released its June acreage and stocks estimate, analysts said.

 

In overnight electronic trading ahead of the report, July corn gained 8 cents to US$3.47 1/2 per bushel, September rose 6 1/4 cents at US$3.56 1/4 and December finished 7 cents higher at US$3.65 1/4. E-CBOT volume in December was 6,316 contracts.

 

"Corn's acreage number is bearish, but after recent losses, that weakness is already built into prices and at worse should open steady to possible 10 cents higher," said Jack Scoville, an analyst at Price Futures Group.

 

The USDA reported that 2007 corn planted acreage was 92.888 million acres, well above the 90.585 million average analyst estimate as well as the 90.454 projected by the USDA in March and sharply higher than the 2006 planted acreage estimate of 78.327 million acres.

 

In the nation's number one corn producing state, Iowa, corn planted acreage increased by 400,000 acres from the USDA's March estimate, while in Illinois; corn acreage gained an additional 300,000 acres from the March intentions report.

 

The corn report is bearish but the soybean acreage number is bullish and corn could be supported by the expected sharp rally in soybean futures, a commercial analyst said.

 

The government said that despite weather-related planting delays, farmers increased corn plantings by 3% from the March report, resulting in the highest planted area since 1944.

 

The USDA estimated soybean planted acreage at 64.081 million acres well below the average analyst estimate of 67.838 million acres as well as the 67.140 million estimated by the USDA in March.

 

"Expect Nov soybeans/Dec corn spreading to be insane. The acreage numbers say everything, the stocks were a no-show," said Mike Zuzolo, chief analyst at Risk Management Commodities, in Lafayette, Indiana.

 

Soybeans are called to open 20-50 cents higher.

 

Corn stocks were estimated at 3.534 billion bushels as of June 1, above the average analyst estimate of 3.467 billion and below the 4.362 billion on June 1, 2006.

 

In the western U.S. Midwest, mainly dry weather is forecast for Saturday with only a few showers possible Sunday and then dry again on Monday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-below normal Saturday and near-to-above normal Sunday.

 

In the eastern U.S. Midwest, dry weather is expected through Monday, with temperatures averaging below normal through Sunday and near-to-below normal Monday, Meteorologix Weather said.

 

In the 6- to 10-day outlook, temperatures are expected to average near- to above-normal west and near- to below-normal east. Rainfall is predicted near to below normal.

 

On daily technical charts, December corn closed near the session low and hit a fresh 6-week low on additional long liquidation and worries about a bearish acreage report, a technical analyst said.

 

The bulls' next upside price objective remains 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.

 

First resistance is seen at US$3.60 and then at US$3.65, Thursday's high. First support is pegged at US$3.56 and then at US$3.55.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher with the benchmark January contract up RMB10 at RMB1,571 per metric tonne.