September 7, 2007

 

CBOT Corn Outlook on Friday: 2-3 cents lower on wheat weakness, consolidation

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 2-to-3 cents lower Friday as weaker wheat values in overnight trade and consolidation ahead of the weekend are expected to weigh on prices, analysts said.

In overnight electronic trading, September corn fell 2 3/4 cents to US$3.20 1/2 per bushel and December declined 2 1/2 cents to US$3.36 3/4. E-CBOT volume in December was 4,405 contracts.

 

Corn should open on the defensive as it was lower overnight on weaker wheat values; corn is still following wheat to some extent, a commission house analyst said. In addition, rain is predicted this weekend for much of the U.S. Midwest and that may help the later planted corn as it heads towards maturity, the analyst said.

 

Wheat futures are expected to open 4-to-6 cents lower.

 

The market is expected to consolidate ahead of the weekend after being supported by the surge in wheat values earlier in the week, a trader said. Export sales were near the upper end of expectations but several private crop estimates are predicting a larger U.S. corn crop which might also temper buying enthusiasm, the trader said.

 

The U.S. Department of Agriculture reported weekly corn export sales for the week ending Aug. 30 were 1.116 million metric tonnes, within the 400,000-1.3 million expected by analysts. Included in the total were sales of 260,300 tonnes for delivery in the 2006-07 marketing year.

 

Allendale Inc., a research and brokerage firm located in McHenry, Ill., released crop estimates from its 18th annual 2008 Farmer Crop Survey Friday. Allendale estimated 2007-08 U.S. corn production at 13.416 billion bushels, with a yield of 157.06 bushels per acre.

 

In August the U.S. Department of Agriculture estimated the U.S. corn crop at 13.054 billion bushels with a yield of 152.8 bushels per acre. The USDA is scheduled to release updated estimates at 8:30 a.m. EDT on Sept. 12.

 

An increased chance for rain is possible for much of the U.S. Midwest in the next 3-to-5 days, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, scattered showers and thundershowers may develop over the weekend, favoring the northern areas. Light or locally moderate showers are forecast on Monday, DTN Meteorlogix Weather said. Temperatures are expected to average above normal through the weekend.

 

In the eastern U.S. Midwest, scattered showers and thundershowers are possible in eastern and southern areas Saturday and Sunday with potential amounts 0.30-1.50 inches and locally heavier, Meteorlogix Weather said. Temperatures are predicted to average near-to-above normal in the period. Additional light-to-moderate showers and thundershowers are possible Monday.

 

In the 6-to-10 day forecast, temperatures are expected to average below or much below normal in the first 2-3 days of this period and then warmer. Rainfall is expected to average near-to-below normal.

 

On daily technical charts, December corn gapped lower on the daily bar chart and hit a fresh three-week low before closing mid-range, a technical analyst said. Corn market bulls are worried that any pullback in wheat prices will spill over into corn.

 

The bulls' next upside price objective is to push prices above solid resistance at US$3.45, which would fill on the upside Thursday's downside price gap on the daily bar chart. The next downside objective is closing prices below solid support at US$3.36.

 

First resistance for December corn is seen at US$3.41 1/2 and then at US$3.45. First support is seen at US$3.37 and then at US$3.36.

 

Deliveries posted against the Chicago Board of Trade September corn future were 1,681 contracts Friday. Large issuers included the customer account of Man Professional Clearing which issued 748 contracts and the customer account of MF Global which issued 178 contracts. Large stoppers included the customer account of Man Professional Clearing which stopped 502 contracts, the customer account of MF Global, which stopped 254 contracts and the house account of Tenco, which stopped 100 contracts. The last trade assigned was Sept. 6.

 

In other corn news, South Korea purchased 100,000 metric tonnes of U.S. corn for delivery in the 2007-08 marketing year.

 

Corn futures on China's Dalian Commodities Exchange settled higher on spillover from stronger soybean prices, analysts said. The May contract finished up 19 yuan at RMB1,652 per metric tonne.