May 23, 2008
CBOT Corn Outlook on Friday: Up 2-3 cents as crude supports ethanol
Chicago Board of Trade corn futures are expected to open 2 to 3 cents higher on overnight gains, boosted by improved prospects for ethanol as crude oil remains high, an analyst said.
In overnight trading, July corn was up 2 3/4 cents to US$5.98 1/2 per bushel, September corn was up 2 1/4 to US$6.10 3/4, and December corn was up 2 3/4 cents to US$6.20.
An analyst said corn's ties to ethanol make it especially sensitive to crude oil price movement. Higher oil prices are an incentive for ethanol producers, which in turn increases corn demand.
"You're looking at corn as part of the fuel equation, and fuel is supportive underneath the market here," an analyst said.
Traders will be cautious and take some profits prior to the Memorial Day weekend, traders said, limiting any gains.
The lateness of this year's crop could continue to be supportive, an analyst said. Much of the Midwest has remained chilly, which does not support good emergence rates. The analyst said he thinks the U.S. Department of Agriculture's May yield estimate was too high, and that the June report will lower the yield projection from 154.9 bushels per acre to around 151 bushels per acre.
"I think the market is afraid to factor that in until later," he said. "I think a lot of people decided they'll just run with the government for now."
The next upside price objective is to push July corn prices above solid technical resistance at Thursday's high of US$6.11 1/4, a technical analyst said. The next downside price objective is to push and close prices below solid support at US$5.79 1/4.
First resistance for July corn is seen at US$6.00 and then at US$6.06, the analyst said. First support is seen at US$5.95.
On Thursday, The U.S. Department of Agriculture's Commodity Credit Corporation said it bought 24,000 metric tonnes of U.S. yellow corn for North Korea. ADM sold the corn to the CCC for US$245.90 per tonne. Delivery is scheduled for May 28-June 7.
In international news, Swiss agrochemical company Syngenta AG (SYT) Friday said it reached an agreement with U.S. rival Monsanto Co. (MON) that settles all outstanding litigation over the companies' global corn and soybean technologies.
The two agrochemical groups said in statements that they've agreed to settle all patent, antitrust and commercial litigation between them and their subsidiaries.