July 11, 2007

 

CBOT Corn Outlook on Wednesday: Steady; spillover from soy may support

 

 

Chicago Board of Trade corn futures are expected to begin day session activity steady Wednesday, with any upside support expected to come from spillover from stronger soybean or wheat futures and position squaring ahead of Thursday's supply and demand reports, analysts said.

 

In overnight electronic trading, July corn fell 2 1/2 cents to US$3.35 1/2 per bushel, September declined 1 1/4 cents to US$3.44 1/4 and December slipped 3/4 cent to US$3.56 1/4. E-CBOT volume in December was 5,224 contracts.

 

The weather for crop development is favorable in the near-term and that is expected to limit the upside in corn, an analyst said. However, soybeans and wheat are expected to open higher and corn is now a follower of the other grains and could benefit from spillover support, the analyst added. Commodity funds were buyers Tuesday, and if the other grains rally there could be additional fund buying interest, the analyst said.

 

The market could also benefit from position squaring ahead of Thursday's U.S. Department of Agriculture supply and demand reports, a commission house analyst said.

 

2007-08 corn ending stocks are estimated at 1.418 billion bushels, sharply above the 997 million estimated in June, according to a survey of 15 analysts by Dow Jones Newswires.

 

The average ending stocks estimate for the 2006-07 crop year was 1.031 billion bushels, 44 million bushels above the 987 million estimated in June, according to an average of 14 analysts.

 

In the western U.S. Midwest there is a chance for a few sprinkles or light showers favoring the south on Thursday, with dry weather returning Friday, DTN Meteorologix Weather said. Temperatures are expected to average below normal for both days.

 

In the eastern U.S. Midwest, there is a chance for a few light showers favoring southern and eastern areas Thursday with mainly dry weather Friday, Meteorologix Weather said. Temperatures are expected to average near-to-below normal Thursday and below normal Friday.

 

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

 

On daily technical charts, December corn closed nearer the session high Tuesday on short covering and supportive longer-term weather forecasts, a technical analyst said. However, the window for any significant weather scare in corn is rapidly closing as the pollination period approaches for much of the U.S. corn crop, he said.

 

The bulls' next upside price objective continues to be closing prices above solid resistance at US$3.65 per bushel, with the bears' downside price objective closing prices below US$3.36.

 

First resistance is seen at US$3.59, Tuesday's high and then at US$3.65. First support is seen at US$3.56, and then at US$3.50. Deliveries posted against the Chicago Board of Trade July corn future were 240 contracts Wednesday. Large issuers included the customer account of Man Professional Financial, which issued 53 contracts and the customer account of Man Financial, which issued 52 contracts. Large stoppers included the house account of ADM Investor Services, which stopped 231 contracts. The last trade assigned was July 10.

 

In other corn news, China is unlikely to become a net importer of corn in the foreseeable future, the general manager of COFCO, China's main grain exporter said.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB/17 at RMB1,499 per metric tonne.