July 10, 2009

 

CBOT Corn Outlook on Friday: Down,  USDA boosts carryout as expected

 

 

Chicago Board of Trade corn futures are expected to open lower Friday after a government supply and demand report reaffirmed that supplies are growing.

 

Corn is called 2 to 4 cents lower. The U.S. Department of Agriculture's supply and demand report showed, as expected, a sharp increase in projected new crop ending stocks as well as an increase in old crop carryout.

 

The USDA projected 2009-10 corn ending stocks at 1.550 billion bushels, up from a June estimate of 1.090 billion. Analysts on average had estimated carryout at 1.567 billion.

 

Old crop carryout was projected at 1.770 billion bushels, up from the June estimate of 1.600 billion. Analysts on average had projected ending stocks of 1.692 billion.

 

The report contained few surprises but was mostly considered slightly negative.

 

"For corn, I don't think it's much of a surprise that carryover is jacked up," said John Kleist, broker/analyst for Allendale. "It's a bearish report from a supply standpoint. The question is, has the market sufficiently discounted this report? I think it's close."

 

Jack Scoville, vice president of Price Futures Group, said the U.S. new crop carryout projection could be seen as slightly friendly. But any bullishness would be dampened by growing world supplies.

 

On the world balance sheet, 2009-10 ending stocks were pegged at 139.2 billion bushels, up from a June estimate of 125.5 billion.

 

Elsewhere in the report, Don Roose, president of U.S. Commodities, noted the USDA was "conservative" with its assessment of the crop and did not increase yield. Many had expected an increase of a couple bushels per acre due to favorable weather.

 

Weather remains mostly favorable for the crop, analysts said, and outside markets could add pressure.

 

In overnight trading, July corn was up 2 1/2 cents to US$3.46 per bushel, September corn was up 1/2 cent to US$3.30 and December corn was up 1/2 cent to US$3.40 1/2.

 

Despite modest gains Thursday, the market is still oversold after recent losses and is due for more of a short-covering bounce, analysts said.

 

The next upside price objective is to push and close December prices above solid technical resistance at US$3.70 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below strong longer-term technical support at US$3.25 a bushel.

 

First resistance for December corn is seen at Thursday's high of US$3.41 1/4 and then at US$3.45, the technical analyst said. First support is seen at Thursday's low of US$3.34 3/4 and then at the contract low of US$3.30 3/4.

 

In export news, South Korea's Major Feedmill Group is seeking 110,000 metric tonnes of corn in a tender to be concluded later today, a trader with the company said Friday.

 

The group is seeking two cargoes, both for arrival in January, he said.

 

MFG is seeking 55,000 tonnes of U.S. corn to arrive in Gunsan on Jan. 15 and 55,000 tonnes of worldwide-origin corn to arrive in Incheon on Jan. 25, the trader said.

 

In other international news China exported 59,698 metric tonnes of corn in the first half, down 60% on year, the General Administration of Customs said on its Web site Friday.