November 20, 2006

 

CBOT Corn Outlook on Monday: Seen 7-9 cents higher on e-CBOT, soy spillover

 

 

Chicago Board of Trade corn futures are predicted to begin trading 7-9 cents higher Monday, following the gains established in overnight trading, floor sources said.

 

In overnight e-CBOT trading, December corn gained 9 1/2 cents to US$3.64 3/4 cents per bushel and March rose 8 1/2 cents to US$3.79. e-CBOT volume in December was 14,325 contracts.

 

The market was pressed hard to the downside last week, and corn moved higher overnight on speculative buying ahead of the opening of the day session, a commission house analyst said. Fundamentally not much has changed since last week, however last week's price weakness is seen as a buying opportunity, he added.

 

Stronger soybean and wheat futures overnight are expected to provide support on the opening as well, sources said.

 

January soybeans rose 14 1/2 cents to US$6.75 in overnight activity.

 

The market will also be watching the situation in Argentina, a major corn exporter. On Friday, Argentina closed the export registry for 2006-07 grains and will extend the closure on new crop corn export declarations until the registry can be reviewed, the secretary of agriculture said Friday.

 

The closure is in response to a surge in new-crop corn export commitments and will remain closed until the government can analyze all the declarations and verify their validity, Secretary of Agriculture Miguel Campos said Friday. The closure won't affect current exports, he said.

 

Argentina is expected to produce 17.5 million metric tonnes of corn in 2006-07 and new crop export commitments of 10.11 million metric tonnes have already been declared, according to the Secretariat.

 

Large speculative traders increased their long corn futures and options on futures positions by 8,151 contracts and their short positions by 5,960 contracts and are now net long 288,101 contracts as of Nov. 17, the Commodity Futures Trading Commission reported Friday.

 

Commercial traders increased their short positions by 29,602 contracts and their long holdings by 21,975 contracts and are now overall net short 187,442 contracts, the CFTC said.

 

On day session open auction technical charts bulls still have the technical advantage, with their next upside price objective closing prices above the contract high of US$3.67 per bushel, a technical analyst said. The bears' next near-term downside price objective is closing prices below solid support at US$3.40, he added. First resistance for December corn is seen at US$3.60 and then at US$3.67. First support is noted at US$3.50 and then at Friday's low of US$3.46.

 

Cash corn basis bids were mostly unchanged Monday. Central Illinois was unchanged at 13 cents over the December future.

 

In other corn news, China is planning to begin developing 100,000 hectares in the Philippines next year for corn production, Philippine Agriculture Secretary Arthur Yap said Monday.

 

Beidahung Group, the corporate arm of China's Heilongjiang provincial government has signed a formal letter of intent, Yap said.

 

Cash prices of corn delivered to Asia may remain range-bound at their current levels as no fresh fundamental factors seem to be emerging to drive CBOT corn futures in any definite direction, sources said. In China, domestic corn prices are rising in local markets as exports scramble to increase their supplies, an analyst said.

 

Corn futures on China's Dalian Commodities Exchange settled higher. The May contract rose RMB20 to RMB 1,599/tonne. Exporter buying of large quantities on the spot market offered help to corn futures, a China-based analyst said.

 

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