September 18, 2007

 

CBOT Corn Outlook on Tuesday: Steady start seen on good US harvest pace

 

 

Chicago Board of Trade corn futures are expected to begin day session trading steady Tuesday as good harvest progress in the weekly crop conditions report and the absence of other fresh news is expected to limit price volatility, analysts said.

 

In overnight electronic trading, December corn slipped 1/4 cent to US$3.52 per bushel, March also declined 1/4 cent to US$3.68 3/4 and May fell 1/4 cent to US$3.79 1/2. E-CBOT volume in December was 3,639 contracts.

 

The U.S. corn harvest was in line with analysts' expectations and above the pace seen last year and should limit any attempt to rally on the upside, an analyst said. In addition, early yield reports continue to be better than expected and will also likely cap any buying interest, the analyst said.

 

Corn should remain grounded by the good start to what should be a record U.S. harvest, a floor trader said. However, Australia cut its wheat crop production estimate and if the wheat rallies sharply corn will follow, the trader said.

 

Australia's Bureau of Agricultural and Resource Economics estimated the country's wheat crop at 15.5 million metric tonnes Tuesday, down 7 million metric tonnes from its June estimate of 22.5 million and the 21 million estimated by the U.S. Department of Agriculture last week.

 

In overnight activity, December wheat ended 12 cents higher at US$8.87 per bushel.

 

Overall weather conditions are expected to continue to remain favorable for the harvest of the U.S. corn crop in the Midwest over the near-term, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, dry conditions or just a few light showers are expected Wednesday through Friday. Temperatures are expected above-to-much-above normal in the period.

 

In the eastern U.S. Midwest dry conditions or just a few light showers are expected Wednesday and Thursday, Meteorlogix Weather said. Temperatures are expected above-to-much above normal for the period.

 

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, supported by the gains in wheat and soybeans, though ideas of a large U.S. corn crop limits the upside in corn, a technical analyst said. The bulls' next upside price objective is to push above solid resistance at last week's high of US$3.58 3/4. The bears' next downside objective is closing prices below support at US$3.45.

 

First resistance for December corn is seen at US$3.54 1/4 and then at US$3.58 3/4. First support pegged at Monday's low of US$3.49 1/4 and then at US$3.45.

 

In other corn news, corn futures on China's Dalian Commodities Exchange ended near unchanged levels Tuesday. The May contract settled up RMB/1 at RMB1,670 per metric tonne.