November 6, 2006

 

CBOT Corn Outlook on Monday: Higher start expected on wheat, e-CBOT

 

 

Chicago Board of Trade corn futures are expected to open 2-3 cents higher Monday, following the strength in overnight trade and stronger wheat futures, sources said.

 

In overnight e-CBOT trading, December corn gained 3 cents to US$3.45 1/4 per bushel and March rose 2 1/2 cents to US$3.59 1/2. e-CBOT volume in December was 6,381 contracts.

 

The market should start out higher based off of the overnight prices and the firm start expected in wheat futures, a floor analyst said.

 

A drought in China's wheat producing region is expected to provide support for wheat with futures expected to open 5-7 cents higher.

 

Trade could be choppy however ahead of the U.S. Department of Agriculture's crop production and supply and demand reports on Thursday, a commission house analyst said. It might be hard to find additional buyers or sellers ahead of the report but a lot depends on what the funds want to do. The funds remain a major component of the market, he added.

 

Large speculative traders cut their long corn futures and options on futures by 12,511 contracts and increased their short positions by 7,328 contracts and are now net long 267,532 contracts as of Oct. 31, down 19,839 contracts from the previous report, the Commodity Futures Trading Commission reported Friday. Large commercial traders increased their long positions by 31,674 contracts while adding 2,709 contracts to their short positions and are now net short 138,204 contracts, the CFTC said.

 

On day session open auction technical charts, bulls are still technically strong with their next upside price objective closing prices in December corn above strong overhead technical resistance at last week's contract high of US$3.53 1/2 per bushel, a technical analyst said. The bears' next near-term downside price objective is closing prices below solid support at US$3.25.

 

First resistance for December corn is seen at Friday's high of US$3.48 and then at US$3.50. First support is seen at US$3.40, and then at US$3.34, the bottom of last week's big upside price gap on the daily chart, he said.

 

Cash corn basis bids were unchanged to mostly higher Monday. Central, Illinois was unchanged at 10 cents over the December future.

 

In other corn news, China's National Grain and Oil Information Center said that the country's corn production for 2006 will probably increase 1.9% on the year to 142 million metric tonnes. This is up 1 million tonnes from the estimate last month as higher production is expected from major growing regions, the Center said.

 

Prices of corn delivered to Asia may rise in the week ahead as U.S. corn futures look likely to increase further, Asian analysts said. The analysts said that the U.S. crop report for corn is expected to cut U.S. corn output further and also project lower ending stocks.

 

Corn futures at China's Dalian Commodities Exchange settled mostly higher. The May contract rose RMB1 to RMB 1,494/tonne.

 

Monday morning the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CST. The weekly crop progress report is scheduled for release Monday afternoon at 3:00 p.m. CST, (2100 GMT).