September 28, 2007

 

CBOT Corn Outlook on Friday: Called 5 cents lower on bearish stocks data

 

 

Chicago Board of Trade corn futures are expected to start daytime on Friday trading 5 cents lower as a larger than expected quarterly stocks estimate from the U.S. Department of Agriculture is expected to press prices at the opening, analysts said.

 

In overnight electronic trading before the report was released, December corn ended unchanged at US$3.86 3/4 per bushel. March also finished unchanged at US$4.02 1/4. E-CBOT volume in December was 5,848 contracts.

 

The USDA reported fourth quarter corn stocks were 1.304 billion bushels, well above the average analyst estimate of 1.147 billion bushels and the 1.142 billion bushel carry over estimate in the USDA September supply and demand report.

 

"Corn should come under pressure based off the higher than expected stocks," said Don Roose, president of US Commodities in West Des Moines Iowa.

 

A stronger opening in wheat futures might temper the downside, a floor trader said. If wheat opens 10 cents higher it might be hard for corn to trade lower, the floor trader said.

 

In the small grains report, 2007-08 all wheat production was estimated at 2.067 billion bushels, below the 2.114 billion estimated in August by the USDA and the average analyst estimate of 2.119 billion.

 

Quarterly wheat stocks were estimated at 1.717 billion bushels well below the average analyst estimates of 1.832 billion.

 

Wheat futures are called to open 5-to-10 cents higher on the report.

 

Corn stocks were above expectations and it's the end-of-the-month and end-of-the-quarter so corn could see some profit taking after the strong gains seen recently, an analyst said. Demand for corn remains strong but supplies appear to be increasing, he said.

 

The USDA reported Friday that 140,208 metric tonnes of corn had been sold to Japan for delivery in the 2007-08 marketing year.

 

On daily technical charts, December corn gapped open higher Thursday and hit a fresh 13-week high, a technical analyst said. Prices also saw a bullish upside "breakout" from a bullish pennant pattern on the daily bar chart, the analyst said. Corn bulls' next upside objective is to close prices above major psychological resistance at US$4.00. The next downside objective for the bears is closing prices below solid support at US$3.76 per bushel which is the bottom of Thursday's upside price gap on the daily bar chart.

 

First resistance for December corn is seen at US$3.89 1/2, Thursday's high, and then at US$3.95. First support is seen at US$3.82 1/2 and then at US$3.80.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the May contract down RMB/5 at RMB1,655 per metric tonne.