October 12, 2006

 

 

CBOT Corn Outlook on Thursday: 3-5 cents higher start after USDA reports

 

 

Chicago Board of Trade corn futures are forecast to begin trading 3-5 cents higher Thursday as a lower than expected crop production figure from the U.S. Department of Agriculture is expected to underpin prices, sources said.

 

In overnight e-CBOT trading prior to the report's release, December corn fell 4 1/4 cents to US$2.79 3/4 cents per bushel and March fell 4 cents to US$2.90. e-CBOT volume in December was 9,302 contracts.

 

The USDA estimated U.S. 2006-07 corn production at 10.905 billion bushels, below the 11.114 billion estimated by the USDA in August as well as the 11.144 billion average analyst estimate.

 

The USDA pegged the 2006-07 corn yield at 153.5 bushels per acre, below the 154.7 estimated in September, and the average analyst estimate of 155.2.

 

"The production number is definitely a surprise," a floor analyst said. However, the market has rallied over the last several weeks and it might be hard to move sharply higher on the report after the recent gains, he said.

 

2006-07 ending stocks were pegged at 996 million bushels, down 224 million bushels from the September report and well below the average trade guess of 1.207 billion. The USDA decreased feed and residual use by 25 million bushels, reflecting higher prices and the smaller crop.

 

The USDA raised China's corn production by three million metric tonnes to 141 million, and reduced 2006-07 world corn ending stocks to 89.54 million metric tonnes from 92.3 million in September.

 

On technical charts, Monday's contract high of US$2.91 basis December remains very strong overhead resistance for the bulls to breach, a technical analyst said. The next major downside objective is closing prices below solid support at US$2.75. First resistance for December corn is seen at US$2.85 and then at US$2.88. First support is pegged at US$2.80 and then at US$2.77.

 

In other corn news, China's corn exports in the period from January to September totaled 2.29 million metric tonnes, down 68% on the year, China's General Administration of Customs said Thursday. Exports in September totaled 10,000 tonnes.

 

World 2006-07 corn stocks are forecast at a record low, according to Strategie Grains monthly private analytical report.

 

The Korean Corn Processing Association or Kocopia, bought 110,000 metric tonnes of optional origin corn Thursday, a trader in Seoul said.

 

South Korea's Pusan branch of the Korea Feed Association bought 52,500 metric tonnes of Chinese-origin corn in a tender concluded Wednesday, an association official said. The Seoul branch of the KFA purchased 160,000 metric tonnes of optional-origin corn in another tender on Wednesday, the association said.

 

Fifty-five thousand metric tonnes will be of U.S. origin with the remaining 105,000 tonnes either U.S. or Chinese origin, an official said.

 

Corn futures at China's Dalian Commodities Exchange settled higher, sources said. The May contract settled up RMB/15 to RMB 1,459/tonne.