July 12, 2006

 

CBOT Corn Outlook on Wednesday: Seen 2-4 cents higher on USDA data, weather

 

 

Corn futures are forecast to begin open auction trading 2 to 4 cents higher Wednesday on supportive USDA stocks data and the near-term weather forecasts, sources said.

 

In overnight e-CBOT trading, July corn rose 2 cents to US$2.55 3/4 and December corn gained 2 1/4 cents to US$2.81 1/2.

 

The U.S. Department of Agriculture estimated U.S. 2006-07 corn ending stocks at 1.077 billion bushels down from the 1.091 estimated in June and well below the lower than the average analyst estimate of 1.266 billion.

 

The USDA noted that "the 2006-07 U.S. outlook for corn includes higher production, lower beginning stocks and higher use compared with last month."

 

Higher projected 2006-07 production of 10.740 billion bushels was partially offset by lower 2005-06 ending stocks as the USDA raised its estimate of feed usage by 100 million bushels and increase its forecast of exports by 25 million.

 

"You would think with an increase in acres of 1.4 million, you'd have a production and ending stock increase. The USDA said 10.74 billion bushels on production and that leaves us with 1.077 billion-bushel ending stocks, which is way below trade estimates by nearly 200 million bushels and over 1.1 billion less than last year at this time," said Brian Hoops, of Midwest Marketing Solutions in Yankton South Dakota.

 

The stocks figures were friendly but the weather is still the major concern, a floor trader said.

 

In the western U.S. Midwest, hotter and drier weather will cover this area from Friday through Sunday, DTN Meteorologix Weather said. Temperatures may retreat a somewhat early next week with the chance of a few showers of thundershowers but it could turn hot later next week.

 

In the 6-to-10-day outlook, temperatures are expected to average above to well above normal and precipitation mostly below normal.

 

In the eastern U.S. Midwest, favorable growing conditions are expected during the next several days as showers diminish and temperatures turn warmer, DTN Meteorologix Weather said. It may be hot this weekend before showers are possible the middle of next week and temperatures should turn cooler.

 

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

 

Deliveries posted against the Chicago Board of Trade July corn contract Wednesday totaled 2,025 contracts. The customer account of Man Financial issued 645 contracts and stopped 718 contracts and the customer account of Dowd Wescott issued 409 contracts and stopped 353 contracts. In addition, the house account of Tenco stopped 136 contracts. Preliminary open interest in July is 4,721 contracts as of Tuesday, July 11.

 

On technical charts, prices hit a five-week high and the next price objective in December corn is closing prices above resistance at US$2.87 1/4. A close below US$2.67 1/4 would provide the bears with some fresh downside technical momentum, a technical analyst said. First resistance for December corn is seen at US$2.80 and then at US$2.84. First support is pegged at US$2.75 1/2, and then at US$2.72.

 

In other corn news, China's corn exports fell 54% on year to 2.27 million metric tonnes, China's General Administration of Customs said Wednesday. Exports of corn were 10,000 tonnes in June, it said on its Web site, citing preliminary data. Official customs data is scheduled to be released around July 25.

 

Corn futures on China's Dalian Commodities exchange settled mixed, with March down RMB2 at RMB1,432/tonne.