November 9, 2007

 

CBOT Corn Outlook on Friday: 3-5 cents higher after supportive USDA report

 

 

Chicago Board of Trade corn futures are predicted to begin day session trading 3-to-5 cents higher Friday, following the release of a supportive November crop production and supply/demand report by the U.S. Department of Agriculture, analysts said.

 

In overnight electronic trading before the report, December corn slipped 2 cents to US$3.87 1/2 per bushel and March also fell 2 cents to US$4.04 1/4. E-CBOT volume in December was 3,874 contracts.

 

The USDA estimated U.S. crop production at 13.168 billion bushels, below the 13.318 billion estimated in October as well as the average analyst estimate of 13.261 billion.

 

The yield per acre was pegged at 153.0 bushels, down from the 154.7 forecast in October as well as the average analyst estimate of 154.1.

 

"The decline in yields should support corn with an unchanged forecast for domestic ethanol demand supportive as well," said Mike Zuzolo, chief analyst at Risk Management Commodities in West Lafayette, Ind.

 

Corn's carryover stocks were pegged at 1.897 billion bushels, down 100 million bushels from the October report and below the average analyst estimate of 1.932 billion. In its supply and demand balance sheet the USDA trimmed the feed and residual category by 50 million bushels from October but left the other categories besides production unchanged including ethanol and exports.

 

"The report did not provide any big surprises, with the market anticipating a positive number on corn," said Don Roose, president of US Commodities in West Des Moines, Iowa. "World corn data was seen as neutral. The data will make the fight for acres next year a little more interesting, but the U.S. carryout should help buffer any smaller acreage in 2008," said Roose.

 

In Iowa, the USDA trimmed the yield to 175 bushels per acre from the October estimate of 180.0. In Illinois yields were unchanged at 178.0 bushels per acre, while in Nebraska; the yield per acre was 162.0 bushels, down from 168.0 in October.

 

The USDA increased its estimate of China's corn crop to 145.0 million metric tonnes, up from 143.0 in October

 

On daily open auction technical charts, December corn reached another new 5 1/2 month high with the bulls maintaining technical momentum, a technical analyst said. Traders will closely look at Friday's production and supply/demand demand data and corn will continue to track crude oil and gold. The bulls next upside price objective is to close prices above solid technical resistance at US$3.90 1/2, this week'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.

 

First resistance is seen at US$3.90 1/2 and then at US$3.95. First support is pegged at Thursday's low of US$3.85 and then at US$3.82 1/4.

 

In other corn news, Hungary's corn crop is expected to be less than half last year's due to poor weather in 2007, a farm ministry official said Friday. The ministry estimates this year's crop will total 3.97 million metric tonnes, down from the 8.42 million tonnes produced last year.

 

Corn futures on China's Dalian Commodities Exchange settled slightly higher with the benchmark May contract up RMB7 to RMB1,774/tonne.