October 11, 2007

 

CBOT Corn Outlook on Thursday: Seen 1-2 cents higher on spillover, positioning

 

 

Chicago Board of Trade corn futures are predicted to start trading 1 to 2 cents higher Thursday, benefiting from spillover from an expected higher start in wheat futures and pre-positioning ahead of Friday's production and supply/demand reports, analysts said.

 

In overnight electronic trading, December corn gained 2 1/4 cents to US$3.49 1/2 per bushel and March rose 1 3/4 cents to US$3.66. E-CBOT volume in December was 5,170 contracts.

 

The market should be higher as participants continue to cover their positions ahead of Friday's U.S. Department of Agriculture reports, an analyst says. Traders remember last October's report when the government reduced the crop size, though this isn't expected to happen this year. Corn is just waiting on the report for direction, the analyst said.

 

The average production estimate for the 2007-08 crop year is 13.459 billion bushels, according to a survey of 24 analysts by Dow Jones Newswires, 151 million bushels above the 13.308 billion estimated by the USDA in September.

 

The average yield estimate for the 2007-08 crop year is 157.7 bushels per acre, according to 23 analysts surveyed, compared to the 155.8 bushels estimated in September.

 

An expected higher start in wheat futures is also expected to provide underlying support for corn, a trader said. Wheat futures are called to open up 8 to 11 cents higher based on stronger overnight prices and news that Morocco tendered for 500,000 metric tonnes of optional origin wheat.

 

Higher outside commodity markets will also provide support for corn in the absence of fresh news, a commission house analyst said. Corn is a follower of the other commodity markets and with crude oil and metals higher and an expected higher start in wheat and soybeans, corn should start out higher, the analyst said.

 

On daily open auction technical charts, December corn settled nearer the session high on short covering and strong gains in soybeans and wheat. Corn will likely remain a follower, but the technical picture in this market remains weak, a technical analyst said. The next downside price objective for market bears continues to be closing prices below solid support at US$3.35. The bulls' next upside price objective is to close prices above resistance at US$3.50.

 

First resistance for December corn is seen at US$3.48 1/2 and then at US$3.50. First support is seen at Wednesday's low of US$3.44 3/4 and then at US$3.40.

 

In other corn news, Israel bought 100,000 metric tonnes of U.S. corn.

 

Corn futures on China's Dalian Commodities Exchange settled modestly lower with the May contract down RMB6 at RMB1,654/tonne.

 

Due to the Columbus Day holiday, the weekly U.S. export sales report for the week ended Oct. 4 will be released Friday at 8:30 a.m. EDT.