October 9, 2006

 

CBOT Corn Outlook on Monday: 2-4 cents higher on wheat spillover

  

 

Chicago Board of Trade corn futures are predicted to begin trading 2-4 cents higher Monday as spillover support from sharply higher wheat futures overnight is expected to underpin corn values, sources said.

 

Little fresh fundamental news is expected as the U.S. Department of Agriculture is closed in observance of Columbus Day.

 

In overnight e-CBOT trading, December corn finished 3 3/4 cents higher at US$2.74 3/4 cents per bushel and March gained 3 cents to US$2.87. e-CBOT volume in December was 4,916 contracts.

 

In e-CBOT trade, December wheat jumped 20 cents to US$4.84 per bushel after the Grains Council of Australia cut its crop production estimate to 10 million metric tonnes.

 

The story in corn is wheat and the fireworks continue, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

"Its corn on the coattails of wheat," despite a very aggressive harvest weekend and it looks like the weather will remain mostly favorable, he added.

 

Corn will need to keep pace with wheat for all the demand reasons and the need for additional acres next year, he added.

 

The market has one eye on the harvest and one eye on the crop report coming up this week, he said.

 

In the western U.S. Midwest there is a chance for light scattered showers with amounts of .10-.50 inch on Tuesday into Wednesday, DTN Meteorologix Weather said. Mainly dry weather is expected Thursday and Friday with temperatures well below normal.

 

In the eastern U.S. Midwest, light to moderate showers are forecast for Tuesday and Wednesday with amounts from .25-1.00 inch. There is a chance for additional precipitation in some locations on Thursday with mainly dry weather due on Friday, DTN Meteorologix Weather said.

 

Large speculative traders cut their short corn futures and options on corn futures positions by 19,116 contracts and added 5,601 contracts to their long holdings and are now net long 203,274 contracts as of Oct. 3, the Commodity Futures Trading Commission reported Friday. Large commercial traders increased their short positions by 26,153 contracts and added 3,427 contracts to their long positions and are now net short 80,434 contracts as of Oct. 3, the CFTC said.

 

On technical charts, bulls are still poised to make a run at the contract high of US$2.87 1/4 and would be top-pickers in the market should exercise extreme caution, a market technician said. First resistance for December corn is seen at US$2.72 1/2 and then at US$2.75. First support is pegged at US$2.70 and then at US$2.67 1/2.

 

Corn basis bids were mixed Monday. Central Illinois was up 7 cents at 2 cents under the December future.

 

In other corn news, premiums for corn delivered to Asia may remain at current levels or decline slightly as expectations of a good U.S. crop and favorable weather for the ongoing harvest in North America, sources said.

 

Ukraine harvested 1.73 million metric tonnes of corn through Oct. 6, down 11% from the 1.94 million harvested in the prior year at this time. Ukraine's plan to harvest 8 million metric tonnes has been disrupted by hot, dry weather and the government in August said this year's harvest is unlikely to exceed 6.0-6.5 million metric tonnes.

 

Corn futures at China's Dalian Commodities Exchange settled higher on recent gains at the CBOT and local demand, sources said. The May contract rose RMB/8 to RMB 1,414/tonne.