August 9, 2007

 

CBOT Corn Outlook on Friday: Down 1-3 cents after USDA crop production report

 

 

Chicago Board of Trade corn futures are predicted to start daytime trading 1-to-3 cents lower Friday after the U.S. Department of Agriculture raised its forecast of U.S. corn production and ending stocks data, analysts said.

 

In overnight electronic trading before the report September corn fell 3 3/4 cents to US$3.28 1/2 per bushel and December also declined 3 3/4 cents to US$3.45. E-CBOT volume in December was 4,722 contracts.

 

The USDA estimated 2007-08 corn production at 13.054 billion bushels, above the 12.840 billion estimated in July and the 12.909 billion bushel average analyst estimate. The yield per acre was projected at 152.8 bushels per acre, higher than the 150.3 forecast in July and the 151.2 average analyst estimate.

 

In the supply/demand balance sheet corn used for ethanol was unchanged from last month while corn exports were raised by 150 million bushels to 2.150 billion. Corn ending stocks were increased by 14 million bushels to 1.516 billion from the 1.502 billion in July.

 

"Corn production was a little bit bigger and the trend will be for it to get larger in the fall with good growing conditions so far, so it might be on the defensive," said Brian Hoops, president of Midwest Market Solutions.

 

Several major corn producing states reported healthy increases in production. In Iowa, the largest U.S. corn producing state, production was estimated at 2.511 billion bushels, up over 450 million bushels from last year. In Illinois, USDA estimated production at 2.314 billion bushels, almost 500 million bushels above last year.

 

By 10:45 a.m. EDT the market will have forgotten about this report and will be trading the off of what happens in the equity markets and the weather, a commission house analyst said. In addition, the market will be trying to determine if the crop has improved or declined since Aug 1, when the report was complied, the analyst added.

 

In the western U.S. Midwest, scattered showers and thunderstorms with amounts of 0.10-0.50 inch and locally heavier are forecast for southern Minnesota and northern Iowa Saturday. Dry weather with only a few light showers are expected for Sunday and Monday, DTN Meteorologix Weather said. Temperatures will be above-to-much above normal in the period.

 

In the eastern U.S. Midwest mostly dry conditions are expected through Monday with temperatures much above normal with highs in the upper 80s-to-low 100s degrees Fahrenheit, Meteorologix Weather said.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal west, near-to-below normal east. Rainfall is expected near-to-below normal.

 

On daily technical charts, December corn closed near the session low Thursday after reaching a new four-week high and scored a bearish "outside day" down on daily technical charts, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at Thursday's high of US$3.60, with the bears' next downside price objective for market bears is closing prices below US$3.36.

 

First resistance for December corn is seen at US$3.50, and then at US$3.53. First support is seen at US$3.48, Thursday's low, and then at US$3.45.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled mostly lower with the May contract down RMB/2 at RMB1,561 per metric tonne.