September 4, 2007

 

CBOT Corn Outlook on Tuesday: 2-4 cents higher following surging wheat values

 

 

Chicago Board of Trade corn futures are expected to start trading 2- to 4-cents higher Tuesday, supported by the surge in wheat values in overnight trading, analysts said.

 

In overnight electronic trading, September corn gained 2 cents to US$3.26 per bushel and December rose 4 cents to US$3.44. E-CBOT volume in December was 10,876 contracts.

 

Wheat continues to surge on production concerns in Europe and Australia and as wheat moves higher, corn will be higher in sympathy, a commission house analyst said.

 

In overnight trading, December wheat jumped 30 cents to US$8.05 1/2 and wheat is expected to open daytime trading 25-to-30 cents higher.

 

Although the U.S. is expected to harvest a record crop and early yield reports have been favorable, corn prices will continue to remain firm as long as wheat continues to trade near all-time highs, a trader said. The corn market needs to keep prices higher in order to encourage planting a large amount of corn acres next year, the trader said.

 

The recent warm and dry spell helped improve the condition of maturing crops in northern and western sections of the U.S. Midwest while continuing to stress filling crops in the east and south, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, dry weather with only a few light showers are possible Wednesday with a chance for scattered to widely scattered thunderstorms Thursday, with the heaviest amounts of up to 0.25-0.75 occurring in northwest areas, Meteorlogix Weather said. Temperatures are expected to average above normal.

 

In the eastern U.S. Midwest, mainly dry weather is forecast for Wednesday with a chance for scattered showers with amounts of 0.10-0.50 and locally heavier in western sections of the region Thursday. Temperatures are predicted to average above- to much-above normal Wednesday and near- to above-normal west and above-normal east Thursday.

 

In the six- to 10-day forecast, temperatures are expected to average near- to below-normal and rainfall is forecast to average near- to below-normal.

 

On daily technical charts, December corn closed near the session low and market bears still have some downside technical momentum as prices closed near the weekly low Friday, a technical analyst said. Seasonally harvest pressure is bearish for prices, the analyst says. The bulls' next upside price objective is to close prices above resistance above US$3.50 in December while the bears' next downside objective remains closing prices below support at US$3.36.

 

First resistance for December corn is seen at US$3.46, Friday's high, and then at US$3.48. First support is seen at last week's low of US$3.38 1/4 and then at US$3.36.

 

Deliveries posted against the Chicago Board of Trade September corn future were 555 contracts. Large issuers included the house account of ADM Investor Services, which issued 200 contracts, and the customer account of RJ O'Brien, which issued 134 contracts. Large stoppers included the house account of R.J. O'Brien, which stopped 90 contracts, and the customer account of ADM Investor Services, which stopped 316 contracts. The last trade assigned was Aug. 28.

 

Large commercial traders reduced their long CBOT corn futures and options on futures positions by 7,476 contracts and decreased their short positions by 12,566 contracts and are now net short 353,887 contracts as of Aug. 28, the Commodity Futures Trading Commission reported Friday. Large speculative traders increased their long futures and options on futures positions by 7,545 contracts and added 1,254 contracts to their short positions and are now net long 117,967 contracts. Index funds increased their long positions by 191 contracts and trimmed their short positions by 439 contracts and are now net long 354,657 contracts, the CFTC said.

 

In other corn news, farmers in Argentina began planting their 2007-08 corn crop though dry weather and frost in the past week have prevented wide-scale planting, the Agriculture Secretariat said Monday. Argentina is forecast to seed 3.9 million hectares of corn up over 9% from the 3.57 million planted in 2006-07, according to the Agriculture Secretariat.

 

Corn futures on China's Dalian Commodities Exchange settled higher, with the benchmark May contract up RMB/16 at RMB1,653 per metric tonne.