September 29, 2006

 

CBOT Corn Outlook on Friday: Steady to 1 cent after USDA stocks report

 

 

Chicago Board of Trade corn futures are expected to begin Friday's day session trading steady to 1 cent higher, following the release of the quarterly grain stocks report by the U.S. Department of Agriculture, floor sources said.

 

In overnight e-CBOT trading, December corn gained 3 1/4 cents to US$2.67 1/2 per bushel and March also rose 2 1/2 cents to US$2.80. e-CBOT volume overnight in December was 14,558 contracts.

 

The USDA reported fourth quarter 2005-06 corn stocks at 1.971 billion bushels, slightly above the average analyst estimate of 1.967 billion but below the Sept. 12 ending stocks figure of 2.012 billion.

 

"The stocks report for corn is neutral," said Shawn McCambridge, senior grain analyst at Prudential Financial. "The estimate was right near the average trade estimate and that will roll over right into the balance sheet for 2006-07, it's a marginal change. The focus should remain on the harvest and production."

 

The market rallied hard over the last several days on concerns about yields and heavy fund buying. Market direction could depend on what the funds want to do after the recent gains, a floor source said.

 

December corn rallied Thursday to levels not seen since early August.

 

In the western U.S. Midwest, mainly dry weather is forecast through Monday with temperatures near normal Saturday and above normal Sunday, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, light showers are expected Friday and Saturday before dry weather returns on Sunday. Near to below normal temperatures are forecast for Saturday with near to above normal on Sunday.

 

On technical charts, December corn hit a fresh six-week high as the bulls gained solid upside technical momentum, a technical analyst said. The next upside price objective for the bulls is closing prices above solid resistance at US$2.70, while the bears next downside objective is closing prices below solid support at US$2.50.

 

First resistance for December is seen at US$2.64 3/4 and then at the August high of US$2.65 3/4. First support is seen at US$2.60 and then at US$2.57 1/2.

 

Cash corn basis bids were unchanged to mostly higher Friday morning, with Central Illinois unchanged at 5 cents under the December future.

 

In other corn news, South Korea-based Korea Corn Processing Industry Association, or Kocopia, bought up to 55,000 metric tonnes of optional origin corn in a tender concluded Friday, a Seoul-based trader said.

 

Corn futures on China's Dalian Commodity Exchange settled mostly higher with the May contract up RMB/6 at RMB1,406/tonne.