August 21, 2007

 

CBOT Corn Outlook on Tuesday: Steady To firm; spillover strength underpins

 

 

Corn futures on the Chicago Board of Trade are seen starting Tuesday's session with a steady to firm undertone, with spillover from other markets expected to lend support to prices.

 

Analysts expect corn to open steady.

 

In overnight electronic trading, September corn was unchanged at US$3.31 3/4, and December corn was unchanged at US$3.48 3/4.

 

Carryover strength from Monday's firm close, solid underlying demand prices strength in neighboring grains and variable reports of crop conditions from scouts on the Midwest crop tour are expected to support prices, analysts said.

 

However, improved crop ratings in Monday's weekly crop progress report is expected to generate light pressure to limit upside momentum, analysts added.

 

Meanwhile, a relatively quiet news front is seen keeping corn in the role of a follower of other markets to start the session, a trader said.

 

A technical analyst said market bulls need to close prices above solid resistance at US$3.50 basis December futures to regain some fresh upside technical momentum. The next downside price objective is to close prices below solid support at US$3.36.

 

First resistance for December corn is seen at US$3.50 and then at US$3.55. First support is seen at US$3.45 and then at Monday's low of US$3.42 1/4.

 

U.S. Department of Agriculture said 58% of the corn crop was rated in good-to-excellent condition as of Aug. 19, up from 56% a week ago and even with last year's rating. Among the biggest corn-producing states, Iowa had 71% of its crop rated good to excellent, up from 64% the previous week, according to the USDA. Seventy-three percent of Iowa's corn was in the dough state, above the average of 64%, and 39% was dented, above the average of 23%, the USDA said.

 

In Illinois, 72% of the crop was in good-to-excellent condition, down from 73% a week ago. Ninety-four percent of the crop was in the dough stage, above the average of 85%, and 60% was dented, above the average of 45%. Nine percent of Illinois' crop was mature, above the average of 4%, according to the USDA.

 

On average, 81% of the country's crop was in the dough stage, above the average of 70%, while 43% was dented, above the average of 31%, according to the USDA. Six percent was mature, above the average of 5%.

 

Crop scouts on the western leg of the John Deere/Pro Farmer U.S Midwest crop tour on 10 different routes took 48 corn samples from fields Monday as the tour made its way across three of South Dakota's nine cropping districts, moving across the southeastern portion of the state en route to Grand Island, Neb. The average corn yield for South Dakota from fields toured across three key cropping districts surveyed was 101.6 bushels per acre. That is up 5.8% from the 95.6 bushels per acre found in last year's tour.

 

On the eastern leg of the tour, Ohio corn yields in 2007 are expected to be lower than last year, with hot, dry weather during critical stages of development cited for much of the decline. Officials estimated the Ohio corn yield at an average of 133.39 bushels per acre, down 6% from the 2006 crop tour finding of 141.42 bushels.

 

The DTN Meteorlogix Weather Service forecast said additional heavy storms may bring more flooding concerns to the western and northern Midwest during the next few days. Meanwhile, hot and dry weather continues over the southeast Midwest until a cold front arrives later this week.

 

In other news, USDA announced private exporters reported the sale of 120,000 metric tonnes of corn for delivery to unknown destinations in the 2007-08 marketing year. USDA also reported the sale of 120,000 metric tonnes of corn for delivery to Iran in the 2007-08 marketing year.

 

Philippine feedmillers, livestock and poultry raisers want to import 80,000 metric tonnes of tax-free corn to fill in an expected shortfall in local output, a senior agriculture department official said Tuesday. The 80,000-tonne volume represents the remainder from a 200,000-tonne tax-free corn import quota allocated to local end-users for 2007. Corn imports to the Philippines are taxed at 35%.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher Tuesday. The benchmark May 2008 contract settled RMB11 higher at RMB1,585/tonne.