September 12, 2008


CBOT Corn Outlook on Friday: Higher on USDA report, outside support



Friday's U.S. government crop production estimates are expected to support Chicago Board of Trade corn futures, which were already poised to climb on support from outside markets, traders said.


Corn is called 3 to 5 cents higher on Friday's open.


The government's projected corn production of 12.072 billion bushels and corn yield of 152.3 bushels per acre were lower than last month's estimates and below analysts' average estimates.


"It's supportive, but nothing really crazy," a trader said.


The USDA in August projected 12.288 billion bushels, with a yield of 155 bushels per acre. Analysts on average expected September USDA estimates of 12.152 billion bushels and a yield of 153.3 bushels per acre.


The lower estimates reflect a dry August, a lack of heat the crop needs to develop, and the lateness of the crop, traders said.


Jim Hemminger, a risk management specialist for Top Third Ag Marketing, said he was surprised the USDA lowered its yield as much as it did. The report, combined with oversold conditions, could help the market rally Friday, he said.


"I would not be surprised to see the October report lower than this on yield and the November report lower than that," he said. "The combine will tell the tale, this year. I think we could be in for a big surprise on the upside today."


Also in the report, the USDA lowered its estimate for 2008-09 world corn ending stocks, to 109.9 million metric tonnes from 112.4 million metric tonnes in August.


In overnight trading, September corn was up 7 1/2 cents to US$5.29 3/4, December corn was up 6 3/4 cents to US$5.40 and March corn was up 7 cents to US$5.59 1/4.


Traders said the market was already poised to start higher Friday because of the overnight gains and support from outside markets. Weakness in the dollar and climbing crude oil offer support, they said.


A couple traders added Friday's report may protect the market from outside market bearishness that has pummeled the market in recent weeks.


The next upside price objective is to push and close December prices above solid technical resistance at US$5.50, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$5.25.


In international news, Chinese corn prices may come under increased pressure amid improving domestic supply, but the government is unlikely to raise support prices for fear of fanning inflation, analysts said Friday.


Also, India may not extend a ban on corn exports that expires on Oct. 15, the Press Trust of India reported Friday, citing the federal farm minister.

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