December 11, 2006

 

CBOT Corn Outlook on Monday: Up 1-2 cents after USDA, following e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start trading 1 to 2 cents higher after Monday's U.S. Department of Agriculture supply and demand reports came in as expected, as stronger prices in overnight trade are expected to support prices, sources said.

 

In overnight e-CBOT trading, December corn rose 3 cents to US$3.57 1/4 per bushel and March gained 2 1/2 cents to US$3.71. E-CBOT volume in March was 5,189 contracts.

 

Monday morning's corn ending stocks figure came in as expected and should have little impact on the market, said Bill Nelson of AG Edwards and Sons in St. Louis.

 

The U.S. Department of Agriculture reported U.S. corn ending stocks were 935 million bushels in December, unchanged from its estimate in November and near the 937-million-bushel average analyst estimate.

 

Although world corn ending stocks numbers were a bit negative, the market is oversold in the short term and due for an upward bounce, with the higher prices overnight expected to provide some support, a commission house analyst said.

 

World 2006-07 corn ending stocks were estimated at 92.7 million metric tonnes up from last month's 90.0 estimate.

 

China's 2006-07 corn crop estimate was unchanged at 143.0 million tonnes, while Argentina's corn crop estimate was raised to 19.0 from 17.5 million tonnes and South Africa's corn crop was increased to 10.0 million tonnes from the 9.5 estimated in November.

 

On day session open auction technical charts, market bulls are fading a bit and need to step up and show some power soon, a market technician said. The bulls' next upside price objective is closing prices above solid resistance at US$3.80 per bushel in March futures. The bears' next downside price objective is closing prices below last week's low of US$3.65.

 

First resistance for March corn is seen at Friday's high of US$3.75 and then at US$3.80. First support is noted at Friday's low of US$3.68 and then at US$3.65.

 

Deliveries posted against the December contract totaled 498 contracts Monday. Large issuers included the customer account of FC Stone, which issued 260 contracts and the customer account of ADM Investor Services, which issued 160 contracts.

 

Large stoppers included the customer account of the LBS division of Man Financial, which stopped 170 contracts, and the house account of Fortis, which stopped 150 contracts. Preliminary open interest in December is 9,228 contracts. The last trade assigned was Dec. 07.

 

Large speculative traders trimmed their long corn futures and option positions and are now long 279,229 contracts as of Dec. 5, the Commodity Futures Trading Commission reported Friday.

 

Large commercial traders reduced their short positions and slightly increased their long positions and are now overall net short 187,889 contracts, a decline of 13,599 contracts from the previous week, the CFTC reported.

 

Corn basis bids were unchanged to mostly higher Monday morning. Central Illinois was up 1 cent at 2 cents under the March future.

 

In other corn news, cash prices of corn and wheat delivered to Asia may increase in the week ahead as demand for U.S. corn and wheat remains strong, sources said. Corn buyers in Asia export corn prices to remain high in 2007 as global demand from the ethanol sector and China's rising domestic use of corn is likely to shrink any surplus available in China for corn exports, sources said.

 

China's January-November corn exports were estimated at 2.63 million metric tonnes, down 67% on the year, the country's General Administration of Customs said Monday.

 

Corn futures on China's Dalian Commodities Exchange ended higher with the most-active September contract up RMB/16 at RMB 1,684/tonne.