September 10, 2007

 

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

 

 

Chicago Board of Trade corn futures are expected to begin day-time trading 2 to 3 cents higher Monday, as spillover from surging wheat prices in overnight activity is expected to provide support for corn futures, analysts said.

 

In overnight electronic trading, September corn gained 2 1/4 cents to US$3.33 1/2 per bushel and December rose 1 1/2 cents to US$3.49. E-CBOT volume in December was 3,490 contracts.

 

Wheat rallied sharply in overnight trade and is expected to trade sharply higher at the opening and corn will follow the wheat, a commission house analyst said.

 

In overnight trade, December wheat jumped 21 1/2 cents to US$8.65 per bushel, another new all-time high.

 

"Until wheat goes down, corn is not going lower," the analyst said.

 

Corn could also see some position squaring ahead of Wednesday's U.S. Department of Agriculture's crop production and supply/demand reports, a trader said.

 

The average production estimate for the 2007-08 crop year was 13.128 billion bushels, according to a survey of 20 analysts, 74 million bushels above the 13.054 billion estimated by the USDA in August.

 

The average yield estimate for the 2007-08 crop year was 153.7 bushels per acre, according to a 20 analysts surveyed, compared the 152.8 bushels estimated in August by the USDA.

 

The USDA is scheduled to release updated estimates at 8:30 a.m. EDT on Sept. 12.

 

Drier and cooler weather is expected in the next several days in parts of the U.S. Midwest, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, dry weather is expected Tuesday and Wednesday, with temperatures turning much cooler from Monday through Wednesday morning with temperatures in the period reaching into the 30 degrees Fahrenheit range in Minnesota and northern Iowa with frost possible, Meteorlogix Weather said.

 

In the eastern U.S. Midwest, mainly dry weather is forecast for the region Tuesday and Wednesday with temperatures turning cooler in the period.

 

In the 6- to 10-day forecast, temperatures are expected to average near to above normal, with rainfall expected to average near to above normal in the west and near-to-below normal east.

 

On daily technical charts, December corn settled higher Friday, near the session high and traded a bullish "outside day" on the daily bar chart, a technical analyst said. Recent price action suggests that December will remain between the range of US$3.72 and the July low of US$3.24 1/2 for at least the near term, the analyst said.

 

The bulls' next upside price objective is to push prices above solid resistance at last week's high of US$3.57 1/4, with the bears' next downside price objective closing prices below solid support at Friday's low of US$3.35 1/2.

 

First resistance for December corn is seen at US$3.49 1/4 and then at US$3.55. First support is seen at US$3.45 and then at US$3.42 1/2.

 

Deliveries posted against the Chicago Board of Trade September corn future were 1,610 contracts Monday. Large issuers included the customer account of Man Professional Clearing which issued 502 contracts and the customer account of MF Global which issued 242 contracts. Large stoppers included the customer account of Man Professional Clearing which stopped 249 contracts, and the customer account of Combs a division of Cunningham Commodities, which stopped 730 contracts. The last trade assigned was Sept. 7.

In other corn news, China's September corn production estimate remained unchanged at 149 million metric tonnes, the country's National Grain and Oils Information Center said Monday.

 

Corn futures on China's Dalian Commodities Exchange settled higher on spillover from stronger soybean and wheat prices, analysts said. The May contract settled RMB20 higher at RMB1,672 per metric tonne.

 

Monday morning, the USDA is scheduled to release the weekly export inspections report at 11:00 a.m. EDT and the weekly crop progress report at 4:00 p.m. EDT (2000 GMT).