November 6, 2007

 

CBOT Corn Outlook on Tuesday: Up 3-4 cents, strong outside markets, weak dollar

 

 

Chicago Board of Trade corn futures are expected to start trading 3-to-4 cents higher Tuesday, boosted by sharply higher crude oil and gold prices as well as a weaker U.S. dollar.

 

In overnight electronic trading December corn rose 3 3/4 cents to US$3.79 per bushel and March also gained 3 3/4 cents to US$3.96 1/4. E-CBOT volume in December was 5,941 contracts.

 

The dollar is at new record lows and the outside inflationary markets are strong with crude oil reaching another all-time high in morning trade, a commission house analyst said. This will provide underlying support to the grain markets including corn with its ethanol component, the analyst said.

 

There is little other fresh news out, a trader said. The U.S. harvest is nearing completion and is not expected to have any influence on market direction, the trader said.

 

The U.S. Department of Agriculture reported that 86% of the U.S. corn crop was harvested as of Nov. 4, slightly above analysts' expectations. In Iowa, 83% of the crop has been combined, in line with the five-year average of 82%. In Illinois, 98% of the crop has been cut above the average of 92%.

 

The western areas of the U.S. where the harvest has been lagging made good progress this past week, said Bill Nelson, associate vice-president and meteorologist at AG Edwards & Sons in St. Louis. Iowa's harvest progress is up 20 percentage points from last week as the weather let the soils dry out and "farmers really went at it," said Nelson.

 

In Nebraska, the third largest U.S. corn producing state, 82% has been harvested, up 19 percentage points from last week and above the 75% five-year average. In Minnesota, 89% of the crop has been harvested, up 16 percentage points from last week and above the five-year average of 80%.

 

Mostly favorable weather for the remaining corn harvest is expected this week, DTN Meteorlogix Weather said.

 

On daily open auction technical charts, December corn closed lower but market bulls still have some upside technical momentum after prices Friday hit a fresh five-week high, a technical analyst said. Corn will continue to track key "outside markets", crude oil and gold which are trading higher. The bulls' next upside objective is to close prices above solid resistance at US$3.80 3/4, last week's high, with the next downside objective for the bears is to close prices below solid support at last week's low of 3.67.

 

First resistance for December corn is seen at Monday's high of US$3.77 1/2 and then at US$3.80 3/4. First support is seen at US$3.72 and then at US$3.70.

 

In other corn news, corn production in the Philippines is likely to increase 9% in 2007 to 6.7 million metric tonnes despite a typhoon hitting a major corn producing area earlier this week, the country's Department of Agriculture said Tuesday. The estimate is slightly lower than a previous estimate of 6.8 million tonnes.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB10 to RMB1,763/tonne.