July 2, 2007

 

CBOT Corn Outlook on Monday: 2-4 cents higher on support from soy, wheat

 

 

Chicago Board of Trade corn futures are expected to start trading 2 to 4 cents higher Monday, bolstered by spillover from an expected higher start in soybeans and wheat, analysts said.

 

In overnight electronic trading, July corn gained 4 cents to US$3.33 1/2 per bushel, September rose 3 1/4 cents at US$3.43 1/4 and December finished 1 1/4 cents higher at US$3.52. E-CBOT volume in December was 13,371 contracts.

 

Corn should be higher on stronger soybean and wheat prices at the opening, a floor analyst said. Wheat is expected to open 6 to 10 cents higher and soybeans 10 to 12 cents higher.

 

Near-term weather isn't threatening to the development of the U.S. corn crop but recent losses were overdone and the market is due for a correction which could also add support, a floor trader said.

 

Although corn planted acreage was well above analyst expectations in Friday's U.S. Department of Agriculture report and helped press prices lower, there is a lot of growing season ahead and it will be hard for corn to trade lower Monday if soybeans are holding double-digit gains, a commission house analyst said.

 

In the western U.S. Midwest scattered showers with amounts of 0.25-0.75 inch may favor northern and eastern areas Tuesday and Wednesday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-slightly above normal, with highs in the 80s and low 90s degrees Fahrenheit Tuesday and back in the 80s F on Wednesday.

 

In the eastern U.S. Midwest, dry weather is expected until Tuesday evening with scattered showers and thundershowers with amounts of 0.25-1.00 inch and locally heavier Tuesday night into Wednesday, Meteorologix Weather said. Temperatures are expected to average slightly above normal Tuesday and Wednesday.

 

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

 

On daily technical charts, December corn traded down to a fresh seven month low Friday after the government released an extremely bearish acreage report, a technical analyst said. Very serious chart damage has occurred to suggest a market top is in place, though the corn market is way overdone on the downside on a short-term technical basis, the analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.65 per bushel, with the bears' next downside price objective closing prices below solid support at US$3.44 per bushel, Friday's low.

 

First resistance is seen at US$3.56 and then at US$3.60. First support is pegged at US$3.44 and then at US$3.40.

 

Deliveries posted against the July future were 1,683 contracts Monday. Large issuers included the customer account of Man Professional Clearing which issued 714 contracts and the customer account of Man Financial, which issued 373 contracts. Large stoppers included the customer account of Man Financial, which stopped 764 contracts, and the customer account of UBS Securities, which stopped 505 contracts. The last trade assigned was June 19.

 

In other corn news, China's 2007 corn production output was raised to 149 million metric tonnes Monday up from 147 million by the country's National Grain and Oils Information Center. China produced 145.48 million tonnes in 2006.

 

The head of the center is expected to announce that China's corn exports may also reach 5 million metric tonnes in 2007, up 32% from last year.

 

Corn futures on China's Dalian Commodities Exchange settled modestly lower with the benchmark January contract down RMB7 at RMB1,564 per metric tonne.