November 8, 2007

 

CBOT Corn Outlook on Thursday: Up 1-2 cents on e-CBOT, outside market influence

 

 

Chicago Board of Trade corn futures are expected to start day time trading 1-to-2 cents higher Thursday, following the tone established in overnight activity and spillover from higher outside markets.

 

In overnight electronic trading December corn ended up 2 1/4 cents at US$3.86 1/2 per bushel and March gained 2 cents to US$4.03 1/4. E-CBOT volume in December was 7,813 contracts.

 

The outside markets are modestly higher but corn is also following the path of the U.S. dollar, so price direction will continue to follow crude oil, gold and the currency with the fundamentals remaining in the background, a trader said. If the dollar is weak against other major currencies, corn should be well supported. U.S. crop production and supply/demand updates are due out Friday and there could be some evening of positions ahead of the numbers, 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 U.S. Department of Agriculture 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.

 

Better-than-expected weekly export sales might also provide some support, a commission house analyst said. The USDA reported that corn export sales were 1.548 million metric tonnes for the week ended Nov. 1, well above the 600,000-to-900,000 expected by analysts. Included in the total was sales of 42,800 tonnes for delivery in 2008-09.

 

On daily open auction technical charts, December corn reached a fresh 5 1/2 month high early in Wednesday's trade before retreating on profit taking and weakness in crude oil prices. Bulls still have upside technical momentum on their side and will continue to closely follow crude oil and gold markets, a technical analyst said. The bulls next upside price objective is to close prices above solid technical resistance at US$3.90 1/2, Wednesday's high. The next downside price objective for the bears is to push prices below solid support at US$3.77 1/2, which would fill on the downside this week's upside price gap on the daily chart, the analyst said.

 

First resistance is seen at US$3.87 1/2 and then at US$3.90 1/2. First support is pegged at Wednesday's low of US$3.82 1/4 and then at US$3.80.

 

In other corn news, Brazil is expected to produce 51.8 million metric tonnes of corn in 2007-08, the National Commodities Supply Corp., or Conab, said Thursday. The figure is in line with Conab's previous estimate. In 2006-07, Brazil harvested 51.3 million tonnes.

 

South Korea has purchased 400,000 metric tonnes of US corn this week, analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled weaker with the benchmark May contract down RMB6 to RMB1,767/tonne.