September 11, 2007

 

CBOT Corn Outlook on Tuesday: Seen 1-2 cents lower ahead of USDA reports

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 1 to 2 cents lower Tuesday as a weaker tone in the overnight session and position squaring ahead of Wednesday's U.S. Department of Agriculture production and supply and demand reports are expected to weigh on prices, analysts said.

 

In overnight electronic trading, September corn ended unchanged at US$3.29 3/4 per bushel, December fell 1 3/4 cents to US$3.44 1/4 and March declined 2 cents to US$3.61. E-CBOT volume in December was 5,747 contracts.

 

Corn should open slightly lower as the weekly crop progress report showed better than expected harvest activity and ahead of the USDA crop production and supply and demand reports, an analyst said.

 

"It's the calm-before-the-storm type of day," the analyst 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 Wednesday.

 

Good harvest progress might also exert some light pressure, but trading should be two-sided, a commission house analyst said.

 

The USDA reported that 8% of the U.S. corn crop was harvested as of Sept. 9, above the 5% harvested in 2006 as well as the 5% five-year average. In Illinois, 12% of the crop was reported harvested, versus the five-year average of 2%. In Indiana, 5% of the crop has been cut, compared to the five-year average of 1%.

 

Forty-two percent of the U.S. crop was rated mature versus the five-year average of 29%.

 

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

 

In the western U.S. Midwest, mainly dry weather is expected through Thursday with temperatures turning cooler Wednesday with lows in the 30-to-40 degrees Fahrenheit range in Minnesota and Iowa before turning warmer on Thursday.

 

In the eastern U.S. Midwest, mainly dry weather is forecast for the region through Thursday with temperatures much cooler Wednesday before rebounding on Thursday, Meteorlogix Weather said

 

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 west and near to below normal east.

 

On daily technical charts, December corn closed modestly lower Monday s higher soybean and wheat prices limited selling interest, a technical analyst said. Traders are looking ahead to Wednesday's USDA reports for direction, though recent price action suggests corn prices will remain in a choppy trading range, the analyst said.

 

The bulls' next upside price objective is to push prices above solid resistance at US$3.50, with the bears' next downside price objective closing prices below solid support at last week'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$3.50. First support is seen at US$3.42 1/2, Monday's low and then at US$3.40.

 

Deliveries posted against the Chicago Board of Trade September corn future were 1,597 contracts Tuesday. Large issuers included the customer account of the Combs division of Cunningham Commodities which issued 730 contracts and Man Professional Clearing which issued 249 contracts. Large stoppers included the customer account of Man Professional Clearing which stopped 556 contracts, and the customer account of MF Global which stopped 385 contracts. The last trade assigned was Sept. 10.

 

In other corn news, India's 07-08 corn exports are expected to increase 500,000 metric tonnes to 1 million tonnes on an increase in production and favorable overseas prices, a senior industry official said Tuesday.

 

China's corn exports totaled 230,000 metric tonnes in August, with total corn exports in Jan-Aug rising 82% on year to 4.15 million tonnes, the country's General Administration of Customs reported Tuesday.

 

Corn futures on China's Dalian Commodities Exchange settled mixed, analysts said. The May contract settled RMB3 lower at RMB1,669 per metric tonne.