October 10, 2006

 

CBOT Corn Outlook on Tuesday: Called 2-3 cents lower on profit taking

 

 

Chicago Board of Trade corn futures are expected to begin trading 2-3 cents lower Tuesday as profit taking after Monday's strong gains and position squaring ahead of Thursday's U.S. Department of Agriculture crop production and supply-demand reports is expected to weigh on futures, sources said.

 

Losses may be tempered by activity in wheat futures, which were sharply higher overnight with December limit up on crop production concerns in Australia.

 

In overnight e-CBOT trading, December corn slipped 1/2 cent lower at US$2.89 cents per bushel and March declined 4 1/2 cents to US$2.98. e-CBOT volume in December was 21,540 contracts.

 

The near-term rally in corn might have run its course, a commission house analyst said. Producers are harvesting the second largest crop ever and market participants may look to lock in profits ahead of the reports Thursday, they added.

 

In a survey conducted by Dow Jones Newswires, the average of 21 analysts' estimate forecast 2006-07 corn production at 11.144 billion bushels, 30 million bushels above the USDA September estimate.

 

The average estimate of the crop's yield by 20 analysts was pegged at 155.2 bushels per acre, 0.5 of a bushel higher than the USDA's 154.7 September estimate.

 

Market direction in corn could be determined by the influence of wheat once again, a floor trader cautioned. Monday, the wheat was the story, and it was sharply higher once again in overnight trade, he noted.

 

On technical charts, bulls still have strong upside momentum on their side and are poised to make a run at major psychological resistance at US$3.00 per bushel, a technical analyst said. First resistance for December corn is seen at US$2.91, Monday's contract high and then at US$2.95. First support is seen at Monday's low of US$2.85 and then at US$2.80.

 

Corn basis bids were unchanged to mostly lower Tuesday. Central Illinois was unchanged at 2 cents over the December future.

 

In other corn news, China's National Grains and Oilseeds Information Center forecast that Chinese corn production was 141 million metric tonnes, unchanged from its forecast in September.

 

Corn futures at China's Dalian Commodities Exchange settled higher on spillover from the strong rally in CBOT corn Monday, sources said. The May contract settled RMB/31 higher to RMB 1,445/tonne.

 

Reports due out for release Tuesday include the weekly export inspections at 10:00 a.m. CDT and the weekly crop progress report at 3:00 p.m. CDT (2000 GMT) Both reports were delayed a day due to Monday's holiday.