November 21, 2006

 

CBOT Corn Outlook on Tuesday: Seen 1/2-1 cent higher in pre-holiday trade

 

 

Chicago Board of Trade corn futures are predicted to start trading 1/2 to 1 cent higher Tuesday, as continued supply concerns are expected to provide some support in front of the Thanksgiving Day holiday, sources said.

 

In overnight e-CBOT trading, December corn rose 1/4 cent to US$3.60 1/4 cents per bushel and March gained 1/2 cent to US$3.75 1/2. e-CBOT volume in March was 4,454 contracts.

 

There is no fresh news out, but the market will continue to be supported by recent reports from China and Argentina concerning supply tightness, a floor analyst said.

 

In addition, domestic producers will continue to ride the bullish move to the upside and are likely to limit their sales of cash corn, he added.

 

The market should see some activity early in the session but floor sources expect trade to slow ahead of the holiday. The CBOT is closing at noon Wednesday and is closed Thursday for Thanksgiving.

 

On day session open auction technical charts the bulls are still in strong technical control after gapping open higher and making new contract highs Monday, a market technician said. The bulls' next upside price objective is closing prices above the contract high of US$3.72 per bushel. The bears' next near-term downside price objective remains closing prices below solid support at US$3.40. First resistance for December corn is seen at US$3.65 and then at US$3.72. First support is seen at Monday's low of US$3.58 and then at US$3.55.

 

Cash corn basis bids were unchanged to lower Tuesday. Peoria, Illinois was down 1 cent at 2 cents over the December future.

 

In other corn news, some Chinese grain firms may delay part of their corn exports as soaring prices on the domestic market has made purchasing corn for export difficult, Chinese traders said Tuesday. "Some corn exporters have to delay the delivery of part of the corn to be exported under contracts they signed in September and October as recent rises in domestic corn prices have made supplies very tight," a senior official with Dalian Fortune Group Co. said. "With domestic prices soaring lately, exporters will lose money on corn export contracts signed in the previous two months," the official said.

 

Estimates of Chinese corn exports range from near 3.0 million metric tonnes to over 4.5 million.

 

Taiwan is temporarily allowing feed corn to be imported from mainland China to ease a shortage in domestic supplies, the island's Bureau of Foreign Trade said Monday.

 

In a statement on its Web site, the bureau said Taiwanese companies can import corn from China between Nov. 20 and Feb. 28 in order to check high domestic prices and meet demand.

 

Chinese glucose producer Xiwang Sugar Holdings Co. said Tuesday it plans to apply for a corn import quota of 600,000 metric tonnes next year. However, the company is likely to be allocated a quota of 100,000-200,000 tonnes, a company source said. For 2006 the company is allowed to import 100,000 tonnes.

 

Indonesia's corn imports may reach a record 1.6 million metric tonnes in 2006 mainly due to a sharp decline in domestic production. According to industry estimates, Indonesian corn output this year may be only 6-to-7 million metric tonnes, down from the 8 million tonnes produced in 2005.

 

Corn futures on China's Dalian Commodities Exchange ended mostly lower. The May contract fell RMB/25 to RMB 1,594/tonne.

 

CBOT December corn options expiration is Tuesday.