October 11, 2006

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents on consolidation ahead of USDA

 

 

Chicago Board of Trade corn futures are forecast to start trading 1-2 cents higher Wednesday as consolidation after recent market volatility and ahead of Thursday's U.S. Department of Agriculture reports is expected to support prices, sources said.

 

In overnight e-CBOT trading, December corn gained 1 1/2 cents to US$2.77 cents per bushel and March rose 1 cent to US$2.89. e-CBOT volume in December was 7,907 contracts.

 

Corn should garner some support from position squaring ahead of the crop production and supply-demand reports on Thursday, an analyst said. Recent volatility in the market might also encourage participants to even up their positions, he 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.

 

The average of 14 analysts estimate 2006-07 ending stocks at 1.207 billion bushels, 13 million bushels below the 1.220 billion estimated in September by the USDA.

 

Corn could draw support from the slower than expected harvest pace reported in Tuesday's crop progress report with harvest activity expected to ease near-term on the wet weather in the U.S. corn belt, a floor source said.

 

The USDA reported that 29% of the U.S. corn crop was harvested as of Oct. 8, slightly below the 30-35% expected by analysts.

 

Forty-four percent of the crop in Illinois has been combined, with 17% reported harvested in Iowa. Iowa and Illinois are the two largest U.S. corn producing states.

 

Sixty-one percent of the crop was in good-to-excellent condition, unchanged from the previous week and above the 56% reported at the same time last year.

 

On technical charts, Monday's contract high of US$2.91 basis December is very strong overhead resistance for the bulls to overcome, a market technician said. The next major downside objective is closing prices below solid support at US$2.70. First resistance for December corn is seen at US$2.80 and then at US$2.85. First support is pegged at Tuesday's low of US$2.75 and then at US$2.72.

 

Corn basis bids were unchanged to mostly higher Wednesday. Central Illinois was up 3 cents at 5 cents over the December future.

 

In other corn news, prices for cash corn in China were lower in some major producing regions over the past two weeks on increased supply from the new crop harvest, which could further weigh on prices in the coming months, analysts said.

 

New EU corn regulations may force Hungary to turn to the European Court, the country's Prime Minister said. On Sept. 28, the EU grains management committee agreed to tight eligibility requirements to offer corn into government intervention stores.

 

Taiwan Sugar Corp is seeking 35,000 metric tonnes of U.S. -origin corn in a tender to be concluded Friday, a trader in Taipei said Wednesday.

 

Corn futures at China's Dalian Commodities Exchange settled mixed, sources said. The May contract settled RMB/1 lower to RMB 1,444/tonne.