August 10, 2006

 

CBOT Corn Outlook on Thursday: Steady start expected on consolidation

 

 

Corn futures are expected to start trading at steady levels Thursday after the market was little changed in overnight trade and ahead of Friday's U.S. Department of Agriculture production and supply and demand reports, sources said.

 

In overnight e-CBOT trading, September corn slipped 1/4 cent to US$2.39 1/2 per bushel, and December also edged 1/4 cent lower to US$2.56 1/2. Overnight volume in December was 2,623 contracts.

 

The market should continue to consolidate ahead of Friday's reports, said John Kleist of Kleist Ag Consulting, in Arlington Heights, Ill. The weather for corn is benign and there is not too much negative news out for the corn market, he added.

 

In a Dow Jones Newswire survey of 22 analysts, the average 2006-07 corn production estimate was 10.795 billion bushels, higher than the USDA's 10.740 billion estimate in July.

 

The average yield estimate was pegged at 149.9 bushels per acre, slightly higher than the 149.0 bushels in July. The August report will be the first field survey taken of the crop.

 

In a Dow Jones Newswire survey of 15 analysts, the average of 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 billion 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.

 

The market is trying to make a base at these price levels with the help of demand and this morning's exports sales reported solid demand, Kleist said.

 

The USDA reported weekly corn export sales were 1.718 million metric tonnes for the week ended Aug. 3, well above the 950,000-1.4 million tonnes expected by analysts. Included in the total were sales of 555,900 tonnes for delivery in 2006-07. South Korea, Taiwan and Japan were the three largest buyers.

 

On technical charts, the bears' next near-term downside objective is closing prices below the late-July low of US$2.51 in December, a market technician said. First resistance for December is seen at US$2.57, Wednesday's high and then at US$2.60 1/2. First support is pegged at US$2.55 and then at US$2.53 1/2, Wednesday's low.

 

Cash corn basis bids were mixed Thursday morning. Central Illinois was down 3 cents at 17 cents under the September future.

 

In other corn news, China's corn exports dropped 62.3% in the January-July period to 2.28 million metric tonnes, China's General Administration of Customs said on its web site Thursday. In July, corn exports were 1 million tonnes.

 

Ukraine exports 2.44 million metric tonnes of corn in the current marketing year from Oct. 1, 2005 and July 31, 2006, up 200,000 tonnes from the year-earlier period, national customs authorities said.

 

Corn futures on China's Dalian Commodities exchange settled mostly lower with May 2007 down RMB/4 at RMB/1,384/tonne.