August 22, 2007

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents; e-CBOT; crop issues, technicals

 

 

Corn futures on the Chicago Board of Trade are poised to start Wednesday's day session higher, taking its cue from overnight action, with lingering concerns over flooding issues in the upper Midwest a supportive feature.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, September corn was 1 1/2-cent higher at US$3.40, and December corn was 2 cents higher at US$3.57.

 

A quiet news front will keep the influence of other grains in play, with support from flooding issues in the northern U.S. crop belt and technical support expected to underpin prices, analysts said.

 

Reports of variable conditions reported from crop scouts trekking across the U.S. corn belt is providing mild support, with recent end user buying interest seen aiding early advances, a trader added.

 

Meanwhile, corn is seen as a potential follower of wheat Wednesday, but solid underlying demand remains a supportive influence, analysts said. However, traders are expected to pay close attention to the December contract for signs of price strength as it nears its key 50-day moving average near US$3.58, they added.

 

A technical analyst said market bulls have regained fresh upside technical momentum. Their next upside price objective is to close December prices above solid resistance at the August high of US$3.60. The next downside price objective is to close prices below solid support at US$3.40.

 

First resistance for December corn is seen at Tuesday's high of US$3.57 1/4 and then at US$3.60. First support is seen at US$3.50 and then at Tuesday's low of US$3.47 1/2.

 

Crop scouts on the western leg of the John Deere/Pro Farmer U.S Midwest crop tour said Nebraska's estimated corn yields are above last year's tour findings. Tour officials estimated the Nebraska corn crop at 133.7 bushels per acre, up 8.5% from the 123.2 bushels the tour estimated in 2006.

 

On the eastern leg of the tour, corn yields were up slightly from last year, experts said Tuesday. The tour found an average Indiana yield of 137.74 bushels per acre, up slightly from 136.69 bushels last year. Scouts on several legs of the tour found variable yields. One producer reported yields as low as 100 bushels and as high as 200 bushels on Tuesday.

 

The DTN Meteorlogix Weather Service forecast said episodes of scattered showers and thunderstorms are on tap for the western Midwest Wednesday through Friday. Temperatures will average near to below normal north and above normal south Wednesday and Thursday, and near to below normal Friday.

 

In the eastern Midwest, episodes of scattered showers and thunderstorms are on tap for northern Illinois, Wisconsin and Michigan Wednesday through Friday. Dry conditions, with only isolated thundershower activity is expected elsewhere in the region. Temperatures will average near normal in the extreme northwest locations, above to much above normal elsewhere in the region, Meteorlogix said.

 

In other news, cash corn prices in China were mostly stable in the week to Wednesday, supported by an output reduction forecast, but analysts said prices are under pressure due to the sale of corn reserves and sluggish feedmeal demand.

 

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