September 6, 2006

 

CBOT Corn Outlook on Wednesday: Expected 1 to 2 cents lower on crop estimate

 

 

Corn futures are seen opening 1 to 2 cents lower Wednesday after a private firm estimated a larger than expected crop production figure, sources said.

 

In overnight e-CBOT trading, September corn gained 3 cents to US$2.31 3/4 per bushel and December rose 3/4 cent to US$2.45 with e-CBOT December volume of 6,339 contracts.

 

Wednesday morning Informa Economics estimated the U.S. corn crop at 11.068 billion bushels with a yield of 153.5 bushels per acre.

 

In August, the U.S. Department of Agriculture estimated the crop size at 10.976 billion bushels with a yield of 152.2 bushels per acre.

 

The numbers are a negative for corn, a commission house analyst said. The market has been gearing towards lower production numbers and the bottom line is this is not friendly, he added.

 

The production estimate should put the market on the defensive, deliveries against September were big once again, and crop conditions improved in Tuesday's crop progress report which is amazing at this time of the year, a floor analyst said.

 

The USDA reported that 59% of the U.S. corn crop was in good-to-excellent condition, up two percentage points from last week. Analysts had expected no change in ratings from last week.

 

Ninety-seven percent of the crop was reported in the dough stage above the 5-year average of 92%, and 81% of the crop was reported dented.

 

Twenty percent of the crop is rated mature compared to 19% last year and the five-year average of 19%.

 

On technical charts, December corn hit a fresh four-week high and then reversed course and ended with a bearish "outside" day on technical charts Tuesday, a market technician said.

 

The next upside price objective for the bulls remains closing prices above solid technical resistance at US$2.50. First resistance for December corn is seen at US$2.45 and then at US$2.48. First support is pegged at US$2.43 1/2 and then at US$2.40.

 

Deliveries posted against September totaled 2,712 contracts. Large issuers included the customer account of Rosenthal Collins, which issued 437 contracts, and the house account of Fimat USA LLC, which issued 358 contracts.

 

Large stoppers included the house account of Shatkin, which stopped 299 contracts and the customer account of Cunningham Commodities, which stopped 368 contracts.

 

Corn basis bids were unchanged to mostly lower Wednesday. Central Illinois was unchanged at 12 cents under the December future.

 

In other corn news, cash corn prices in China were stable in the week ended Wednesday, analysts said.

 

Corn processors and feed producers are not buying in large amounts as supplies are stable and abundant, a grain analyst said.

 

Ukraine is likely to harvest between 6.5 and 7 million metric tonnes of corn in 2006, not the 7.5 million to 8 million expected earlier, the agriculture ministry said Wednesday.

 

Corn prices on China's Dalian Commodity Exchange settled higher with the benchmark May 2007 contract up RMB/9 at RMB1,410/tonne.