August 9, 2006

 

CBOT Corn Outlook on Wednesday: Steady to mixed trade expected

 

 

Corn futures are forecast to begin trading steady to mixed Wednesday following the tone established in quiet overnight trade and ahead of Friday's U.S. Department of Agriculture crop production and supply and demand reports, sources said.

 

In overnight e-CBOT trading, September corn finished unchanged at US$2.36 per bushel, and December also ended the session unchanged at US$2.53. e-CBOT volume in December was 2,668 contracts in overnight activity.

 

The market is waiting on Friday's USDA reports, a commission house analyst said. The current weather is perfect, and there is some rain in the U.S. Midwest as well. Trading could be two-sided as participants even up their positions ahead of the report, he added.

 

In a survey of 22 analysts, the average 2006-07 corn production estimate was 10.795 billion bushels, slightly higher than the U.S. Department of Agriculture's 10.740 estimate. The average yield estimate was pegged at 149.9 bushels per acre, slightly higher than the 149.0 bushels projected in July. The August report will be the first field survey taken of the crop.

 

In a survey of 15 analysts, the average 2005-06 corn ending stocks estimate was 2.041 billion bushels, 21 million lower than the 2.062 estimated by the USDA in the July supply and demand report. The average ending stocks estimate of the 2006-07 was 1.105 billion bushels, slightly above the 1.077 forecast by the USDA in July.

 

The USDA is scheduled to release its August crop production report on Friday at 7:30 a.m. CDT (1230 GMT).

 

In the western U.S. corn belt, scattered showers and thundershowers are expected over the next several days in parts of the region through Sunday, DTN Meteorologix Weather said. Amounts will range from .10-1.00 inch in the period with locally heavier amounts possible. Temperatures are forecast near to above normal with highs in the 80's F to middle 90's Fahrenheit.

 

In the eastern U.S. Midwest, light showers are possible Wednesday with scattered showers and thunderstorms expected on Thursday with amounts of .10-.50 inch and locally heavier, DTN Meteorologix Weather said. Mostly dry conditions are expected for the weekend. Temperatures are expected near to above normal with highs in the middle 80's F to middle 90's F.

 

On technical charts, prices gapped open lower on daily bar charts and closed near the lows of the session. The bears' next downside objective is closing prices below support at the July low of US$2.521 in December, a technical analyst said. First resistance for December corn is pegged at US$2.55 1/2 and then at US$2.57 1/2. First support is seen at US$2.52, Tuesday's low and then at US$2.51.

 

Cash corn basis bids were unchanged to higher Wednesday morning. Central Illinois was unchanged at 14 cents under the September future.

 

In other corn news, corn futures on China's Dalian Commodities exchange ended higher with May 2007 up RMB/2 at RMB/1,388/tonne.