June 30, 2006

 

CBOT Corn Outlook on Friday: Up 2-4 cents on weather, USDA data neutral

 

 

Corn futures at the Chicago Board of Trade are predicted to begin open auction trading 2-4 cents higher Friday as supportive weather forecasts and after the release of updated acreage and stocks numbers from the U.S. Department of Agriculture, sources said.

 

In overnight e-CBOT trading, July corn gained 3 1/2 cents to US$2.32 per bushel and December ended up 3 cents at US$2.57 1/2.

 

The USDA estimated corn planted acreage at 79.366 million acres, slightly below the average analyst estimate of 79.797 million, but above the 78.019 million estimated in March.

 

Quarterly grain stocks were projected at 4.363 billion bushels, in line with the average estimate of 4.362 billion and slightly higher than the 4.321 billion in June, 2005.

 

"The recent break in corn prices seem to be perfectly in line with the acreage expectations," said John Kleist of Kleist Ag Consulting in Arlington Heights, Ill. Corn stocks are neutral and the acreage is pretty close to the estimates and still under a year ago, he noted. Using trend line yields, the new crop ending stocks will increase by 200 million bushels, everything else being equal, new crop stocks will still be projected tight, he added.

 

"Now the market will go back to the growing season," he said.

 

The report was basically neutral, now the market can focus on the weather, a floor traded agreed.

 

In the western U.S. Midwest, there is a chance for a few thundershowers with amounts expected less than 0.25 inch Friday and into Saturday in the northern and eastern areas of the region, DTN Meteorologix Weather said. There is a chance for scattered light showers with amounts 0.10-0.40 inch on Sunday. Temperatures are expected to average above-normal in this period.

 

In the 6-to-10 day forecast, temperatures are expected to average near to above normal and precipitation below normal, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, there is a chance for scattered thundershowers in the northern and northwest areas during the weekend with amounts .10-.50 inch and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average above normal during the weekend.

 

In the 6-to-10-day outlook, temperatures are forecast to average near to below normal and rainfall near to below normal, DTN Meteorologix Weather said.

 

Deliveries posted against the July contract totaled 2,096 contracts, slightly above the 1,000-2,000 expected. The customer account of RJ O'Brien issued 746 contracts and the house account of Tenco issued 400 contracts. The house account of ADM Investor Services stopped 872 contracts and the customer account of Man Financial stopped 385 contracts.

 

On technical charts, First resistance for December corn is seen at US$2.56 1/4, Thursday's high and then at US$2.58. First support is pegged at US$2.52 1/4 and then at US$2.50.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled slightly higher with the March contract up RMB5 to RMB1,476/tonne.