September 17, 2007

 

CBOT Corn Outlook on Monday: Expected 4-5 cents higher on stronger soy, wheat

 

 

Chicago Board of Trade corn futures are predicted to begin day session trading 4 to 5 cents higher Monday, underpinned by sharply higher soybean and wheat values in overnight activity, analysts said.

 

In overnight electronic trading, December corn rose 4 3/4 cents to US$3.53 3/4 per bushel, March gained 4 1/4 cents to US$3.70 1/4 and May ended 4 3/4 cents higher to US$3.81. e-CBOT volume in December was 4,876 contracts.

 

Corn is expected to start higher based on spillover from the sharply higher wheat and soybean values seen in the overnight trade, a commission house analyst said. Concerns over possible frost damage to the soybean crop in parts of the northern U.S. Midwest boosted November soybeans 16 1/2 cents higher in over night trade to US$9.71 1/2 per bushel.

 

Continued wheat production concerns in Europe and Australia helped push wheat futures sharply higher with CBOT December wheat futures 24 cents higher at US$8.70.

 

Early U.S. corn yields continue to come in better-than-expected and that should limit the upside potential in corn prices, a trader said. However, given the overnight rally in wheat and soybeans corn should be well supported, the trader said.

 

Cold weather occurred in the northern U.S. Midwest over the weekend with temperatures in the low-to-middle 30 degrees Fahrenheit with a few reports of 28 degrees F in north-central Iowa and southwest Minnesota, DTN Meteorlogix Weather said. However, due to the advanced development of the U.S. corn crop, no major damage is expected, the form said.

 

In the western U.S. Midwest, scattered showers and thunderstorms are expected Tuesday, with dry weather returning Wednesday. Temperatures are expected above to much-above normal in the period.

 

In the eastern U.S. Midwest, dry conditions are expected Tuesday, with only a few light showers Wednesday, Meteorlogix Weather said. Temperatures are predicted above to much above normal.

 

In the 6- to 10-day outlook, temperatures are predicted mostly above normal while rainfall is near to below normal.

 

On daily technical charts, December corn closed higher and near mid-range, though the impending U.S. corn harvest remains a bearish underlying seasonal factor, a technical analyst said. The bulls' next upside price objective is to close prices above solid resistance at last week's high of US$3.58, with the bears' downside objective closing prices below support at US$3.50.

 

First resistance for December corn is seen at US$3.50 and then at US$3.54 1/4. First support pegged at Friday's low of US$3.45 1/4 and then at US$3.42 1/2.

 

Large commercial traders reduced their short CBOT corn futures and options on futures positions by 4,332 contracts and increased their increased their long positions by 12,777 contracts and are now net short 328,530 contracts as of Sept. 11 the Commodity Futures Trading Commission reported Friday. Large speculative traders increased their long futures and options on futures positions by 4,490 contracts and increased their short positions by 1,932 contracts are now net long 102,281 contracts. Index funds decreased their long positions by 8,099 contracts and added 959 contracts to their short positions and are now net long 350,418 contracts, the CFTC said.

 

In other corn news, corn farmers in the Philippines have agreed to a plan by domestic end-users to import 70,000-80,000 metric tonnes of corn tax-free in the last quarter of 2007, a senior agriculture official said Monday.

 

Corn futures on China's Dalian Commodities Exchange settled little changed Monday. The May contract settled up RMB1 at RMB1,669 per metric tonne.

 

Monday morning, the U.S. Department of Agriculture 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.