October 2, 2007

 

CBOT Corn Outlook on Tuesday: Down 5-6 cents on e-CBOT losses, harvest progress

 

 

Chicago Board of Trade corn futures are expected to begin trading 5-to-6 cents lower Tuesday, following the tone established in overnight activity and good harvest progress in Monday's crop progress report, analysts said.

 

In overnight electronic trading, December corn fell 6 3/4 cents to US$3.62 per bushel and March declined 7 3/4 cents to US$3.77 3/4. e-CBOT volume in December was 10,796 contracts.

 

Corn should open lower based on the weakness in overnight activty and with harvest progress rolling along in the U.S. Midwest, a commission house analyst said.

 

The U.S. Department of Agriculture reported that 31% of the U.S. corn crop was harvested as of Sept. 30, up from the 18% combined in 2006 as well as the five-year average of 20%.

 

In Illinois, 60% of the crop has been harvested, well above the five-year average of 29%. In Iowa, the largest U.S. corn producing state, 13% of the crop has been cut, compared to 7% last year and the average of 9%.

 

The market might also come under pressure from a private crop forecaster's production estimate, a trader said. Late Monday FC Stone estimated the 2007 U.S. corn crop at 13.445 billion bushels with a yield of 157.4 bushels per acre. This is above the USDA production estimate of 13.308 billion bushels and a yield of 155.8 bushels per acre in Sept.

 

The production estimate was higher than the Sept. USDA figure which was not a surprise given the yield reports but it is higher and will add to the prices weakness, the trader said.

 

In addition, the dollar was strong overnight and energy prices are lower as well which should also temper any upside price strength, the commission house analyst said.

 

On daily technical charts, December corn closed near the session low Monday. A rare and potentially bearish broadening pattern has formed on the daily chart and the bulls have faded in the last two sessions, a technical analyst said. Bulls however still have near-term technical advantage and their next upside price objective is to close prices above solid resistance at US$3.80. The next downside objective for market bears remains closing prices below solid support at US$3.58 3/4, which is the bottom of an upside price gap on daily open auction charts.

 

First resistance for December corn is seen at US$3.72, and then at Monday's high of US$3.75 3/4. First support is seen at Monday's low of US$3.68 and then at US$3.66.

 

In other corn news, Brazil exported almost 1.4 million metric tonnes of corn in Sept., up from 1.3 million tonnes in Aug. and about four times more than in Sept. 2006, the country's Foreign Trade Ministry reported Monday.

 

Corn futures on China's Dalian Commodities Exchange remained closed due to a holiday.