September 5, 2006

 

CBOT Corn Outlook on Tuesday: Called 2-3 cents higher on wheat spillover

 

 

Corn futures are expected to begin day session trading 2-3 cents higher Tuesday as strong wheat futures prices overnight are expected to provide spillover support to the corn market, sources said.

 

In overnight e-CBOT trading, September corn rose 3 1/2 cents to US$2.33 1/2 per bushel and December gained 3 1/4 cents to US$2.49 with e-CBOT December volume of 8,498 contracts.

 

Corn should see some spillover from the wheat market, said Roy Huckabay, executive vice president with the Linn Group. In addition, there has been plenty of demand for U.S. corn, particularly from Asia, and this should also support the market, he added.

 

Higher prices for French wheat, Indian wheat imports and concerns about the Australia wheat crop helped boost CBOT wheat futures overnight, sources said.

 

A floor analyst noted that Friday's FC Stone corn production estimate could also underpin the market. FC Stone estimated the U.S. corn crop at 10.887 billion bushels, with a yield of 151.0 bushels per acre. This is below the 10.976 billion bushel estimate by the U.S. Department of Agriculture in August.

 

Index fund buying could also add additional support, the analyst noted.

 

Commercial traders reduced their long positions by 35,196 contracts and cut their short positions by 25,068 contracts and are now net long 4,798 corn futures and options on futures contracts as of Aug. 29, the Commodity Futures Trading Commission reported Friday.

 

Large non-commercial traders boosted their long corn futures and options on futures positions by 12,058 contracts and increased their short holdings by 7,594 contracts and are not long 115,296 contracts in the same period, the CFTC reported.

 

On technical charts, the next upside price objective for the bulls is closing prices above solid technical resistance at US$2.50 in December corn, a technical analyst said. First resistance for December corn is seen at US$2.48 1/4 and then at US$2.50. First support is pegged at US$2.45 and then at US$2.43.

 

Deliveries posted against September totaled 2,700 contracts. Large issuers included the customer account of the USA Trading Division of Man Financial, which issued 641 contracts, and the house account of Shatkin, which issued 685 contracts. Large stoppers included the customer account of Rosenthal, which stopped 439 contracts and the customer account of Fimat USA LLC, which stopped 358 contracts.

 

Corn basis bids were unchanged to higher Tuesday. Central Illinois was unchanged at 12 cents under the December future.

 

In other corn news, China's National Grain and Oils Information Center CNGOIC, said it cut its forecast of corn production by 1 million metric tonnes to 141 million in 2006., mainly due to ongoing drought.

 

South Korea's Major Feedmill Group bought 55,000 metric tonnes of optional-origin corn from Cargill a Seoul-based trader said Tuesday.

 

Tuesday morning the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CDT and the weekly crop progress report at 3:00 CDT (2000 GMT).