October 17, 2006

 

CBOT Corn Outlook on Tuesday: Higher start expected on follow through

 

 

Chicago Board of Trade corn futures are expected to begin trading 4-6 cents higher Tuesday as a late rally on Monday's close and stronger prices overnight are expected to underpin prices, sources said.

 

Floor traders noted the news that the CME buying the CBOT would have no impact on trading operations in the short-term, with a floor manager calling the move "inevitable."

 

In overnight e-CBOT trading, December corn gained 6 1/4 cents to US$3.23 cents per bushel and March rose 5 3/4 cents to US$3.32 1/4. e-CBOT volume in December was 5,703 contracts.

 

Corn rallied late Monday on wheat's late surge and traded higher overnight as well, so corn should open higher on follow through, a commission house analyst said. The direction of wheat will influence corn with speculative fund interest also a factor in price direction, he added.

 

The trade is all techncial right now, he said.

 

Monday's crop progress report was in line with expectations and should have little impact on direction, a floor trader said.

 

The U.S. Department of Agriculture reported Monday afternoon that 41% of the U.S. corn crop was harvested, below the 48% combined in 2005 and slightly below the five-year average of 43%. Analysts had expected harvest progress between 38%-41%.

 

On technical charts, the bull's next upside price objective is closing prices above solid resistance at US$3.25 per bushel, a technical analyst said. The bear's near-term downside objective is closing prices below solid support at US$3.00. First resistance for December corn is seen at Monday's contract high of US$3.17 3/4 and then at US$3.20. First support is seen at US$3.09 1/2 and then at US$3.05.

 

Corn basis bids were mixed Tuesday. Central Illinois was 1 cent higher at 6 cents over the December future.

 

In other corn news, corn prices in China declined slightly in October, partly due to pressure from the new harvest, which is expected to arrive in early November, said analysts at the China National Grains & Oils Information Center.

 

The Ukraine government has issued a decree imposing quotas on Ukrainian grain exports until the end-of-the-year has been published on the Parliament's web site. Corn's export quota is 600,000 metric tonnes.

 

Ukraine harvested 2.971 million metric tonnes of corn through Oct. 16 on 858,999 hectares, or 47% of the total area to be harvested, with an average yield of 3.46 tonnes a hectare, according to APK-Inform, quoting a source in the agriculture ministry.

 

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

 

Corn futures at China's Dalian Commodities Exchange ended mostly higher however the May contract fell RMB/1 to RMB 1,483/tonne.