September 10, 2009

 

CBOT Corn Outlook on Thursday: Up slightly as trade awaits USDA report

 

 

Chicago Board of Trade corn futures are expected to open a little higher Thursday amid low volume and positioning ahead of Friday's government reports.

 

Corn is called 1 to 2 cents higher. In overnight trade September corn was up 1 1/4 cents to US$3.06 3/4 per bushel, December corn was up 1 cent to US$3.10 3/4 and March corn was up 1 1/4 cents to US$3.24 1/2.

 

The market has no clear direction Thursday, traders and analysts said. The trade is awaiting Friday's crop-production report, which the U.S. Department of Agriculture will release at 8:30 a.m. EDT.

 

Corn prices have been under pressure in recent weeks on ideas that "a big crop gets bigger." Accordingly, analysts surveyed by Dow Jones Newswires on average estimate the USDA will project a crop of 12.932 billion bushels, up from an August estimate of 12.761 billion and above 2008's output of 12.101 billion.

 

Analysts on average projected the yield at 161.5 bushels per acre, which would be two bushels higher than the USDA's August estimate and above the 2008 total of 153.9 bushels per acre.

 

But Lanworth, a private firm that relies in part on satellite imagery, has gotten some traders' attention by projecting a final yield below 154 bushels per acre. A couple of traders said the drastically lower estimate might have given the market some support Wednesday.

 

"They're going to be heroes or goats," a trader said.

 

Although the trader doesn't agree with the estimate, he said that in a way he hopes they are right, because a much-smaller-than-expected crop would spark more interest in the market, which has had very low volume recently.

 

The crop has enjoyed favorable weather during the past month, and forecasts have remained benign, with no frost threat seen during the next two weeks.

 

The Agriculture Department Thursday announced private export sales of 176,000 metric tonnes of corn for delivery to South Korea in the 2009-10 marketing year. Some analysts said the market will continue to attract demand around the US$3 level.

 

Weekly export sales will be released a day later than usual, on Friday, because of the Labor Day holiday.

 

The bulls' next upside price objective is to push prices above solid technical resistance at last week's high of US$3.32 a bushel. The next downside price objective for the bears is to push and close prices below major psychological support at US$3.00 a bushel.

 

First resistance for December corn is seen at Wednesday's high of US$3.12 and then at US$3.15. First support is seen at Wednesday's low of US$3.04 3/4 and then at this week's low of US$3.02.

 

In international news, the Buenos Aires Cereals Exchange on Wednesday cut its forecast for 2009-10 commercial corn area to 1.875 million hectares, down from 2 million hectares forecast last week.

 

The area marks a 24% drop on the year and is down 31% from the average over the past five years. Insufficient soil moisture levels in the principal corn areas is delaying planting.