November 7, 2007

 

CBOT Corn Outlook on Wednesday: Up 3-4 cents on weak dollar, higher outside markets

 

 

Chicago Board of Trade corn futures are predicted to begin trading 3-to-4 cents higher Wednesday, underpinned by a slumping U.S. dollar and higher energy and metals prices.

 

In overnight electronic trading December corn gained 4 cents to US$3.89 3/4 per bushel and March rose 3 3/4 cents to US$4.06 3/4. E-CBOT volume in December was 13,836 contracts.

 

"It's all about the dollar," a commission house analyst said. The dollar fell to new record lows overnight, supplying support to prices with additional strength from the sharp gains in gold, silver and crude oil, the analyst said. Even if crude oil should trade lower, the focus is on the dollar and its effect on commodities, the analyst added.

 

Little attention is expected to be focused on Friday's U.S. Department of Agriculture's crop production and supply/demand reports, a trader said. The dollar is plummeting and trade's is not focusing on the fundamentals, the trader said.

 

The average production estimate for the 2007-08 U.S. corn crop was 13.261 billion bushels, according to a survey of 24 analysts by Dow Jones Newswires, 57 million bushels below the 13.318 billion estimated by the USDA in October. The average yield estimate for the 2007-08 crop was 154.1 bushels per acre, according to 24 analysts surveyed, compared to the 154.7 bushels estimated in October. The USDA is scheduled to release an updated report Friday at 0830 EST (1330 GMT).

 

The average 2007-08 corn ending stocks estimate is 1.932 billion bushels, according to a survey of 19 analysts, down from the 1.997 billion bushels estimated in October.

 

On daily open auction technical charts, December corn gapped open higher on the daily bar chart, hit a fresh six-week high and closed near the session high. Market bulls have upside technical momentum on their side and corn will continue to follow crude oil and gold, which closed sharply higher Tuesday, a technical analyst said. The bulls' next upside objective is to close prices above solid resistance at US$3.89 1/2, September's high. The next downside objective for the bears is to close prices below solid support at US$3.67.

 

First resistance for December corn is seen at US$3.87 1/2 and then at US$3.89 1/2. First support is seen at US$3.80 and then at US$3.77 1/2.

 

In other corn news, China's National Grain and Oils Information Center estimated the country's 2007-08 corn production at 148 million metric tonnes, down one million from its estimate last month. Last year, China produced 145 million metric tonnes.

Cash corn prices were higher in the week ended Wednesday as industrial processors and slack farmer selling boosted values, analysts said. and

 

Turkey purchased 150,000 metric tonnes of U.S. and Argentinean corn in a tender concluded Tuesday, analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB10 to RMB1,773/tonne.