December 11, 2007

 

CBOT Corn Outlook on Tuesday: 2-3 cents higher on supportive USDA report

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 2-to-3 cents higher Tuesday after the U.S. Department of Agriculture reduced its estimate of 2007-08 corn ending stocks by a larger than expected amount, analysts said.

 

In overnight electronic trading prior to the report, March corn ended 3/4 cent lower at US$4.17 per bushel. E-CBOT volume in March was 4,170 contracts.

 

The USDA estimated 2007-08 U.S. corn ending stocks at 1.797 billion bushels, down 100 million from the 1.897 billion it estimated in November and below the average analyst estimate of 1.879 billion bushels.

 

The government raised its export projection by 100 million bushels to 2.450 billion, which if reached, would be a new marketing year record.

 

"The USDA is projecting record exports for corn, and that just illustrates there is aggressive demand out there as the world continues to desire supplies for food, feed and biofuels," said Joe Victor, vice-president at Allendale Inc, McHenry, Ill.

 

Corn used to produce ethanol was left unchanged at 3.2 billion bushels.

 

In the world supply/demand balance sheet the USDA trimmed its world corn ending stocks estimate to 109.1 million metric tonnes, down from the 110.4 estimated in November.

 

"World coarse grains shrunk 1.65%. I don't think the trade was quite expecting that amount," said Mike Zuzolo, chief analyst at Risk Management Commodities in West Lafayette, Ind.

 

On daily open auction technical charts, March corn futures hit another fresh 5 1/2 month high and there are no signs of a market top being close a hand, a technical analyst said. The next upside objective remains pushing and closing prices above solid technical resistance at US$4.23 per bushel with the next downside objective is to push prices below solid support at US$4.00.

 

First resistance for March is seen at US$4.19 1/2, Monday's high and then at US$4.23. First support is seen at Monday's low of US$4.15 1/2 and then at US$4.09.

 

Deliveries posted against the Chicago Board of Trade December future were 2,403 contracts Tuesday. Large issuers included the customer account of Man Professional Clearing which issued 609 contracts and the customer account of Cunningham Commodities, which issued 350 contracts. Large stoppers included the customer account of Man Professional Clearing, which stopped 543 contracts, the customer account of MF Global, which stopped 268 contracts and the customer account of Shatkin, which stopped 237 contracts. The last trade assigned was Dec. 10.

 

In other corn news, China's government sold 238,100 metric tonnes of corn from its reserves, almost half of the 500,000 it planned to sell.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB6 to RMB1,749/tonne.