November 8, 2006

 

CBOT Corn Outlook on Wednesday: Seen 3-4 cents higher ahead of USDA reports

 

 

Chicago Board of Trade corn futures are expected to start trading 3-to-4 cents higher Wednesday on follow through buying from Tuesday and stronger prices overnight, sources said.

 

In overnight e-CBOT trading, December corn gained 4 1/2 cents to US$3.55 1/2 cents per bushel and March rose 4 cents to US$3.70 3/4. e-CBOT volume in December was 13,865 contracts.

 

Corn was higher overnight and should be higher Wednesday as the market is riding a wave of speculative fund buying until Thursday's U.S. Department of Agriculture production and demand data provide further direction, a commission house analyst said.

 

In a survey conducted by Dow Jones Newswires, the average of 21 analysts' estimate forecast 2006-07 corn production at 10.838 billion bushels, 67 million bushels below the USDA October estimate.

 

The average estimate of the crop's yield by 20 analysts was pegged at 152.5 bushels per acre, below the 153.5 forecast by the USDA in October.

 

The average of 15 analysts estimate 2006-07 ending stocks at 912 million bushels, 84 million bushels below the 996 million estimated in October by the USDA.

 

It's all technically fund based, with the funds in charge of the market's direction, a floor analyst said.

 

On day session open auction technical charts, the bulls are technically strong and their next upside price objective is pushing prices above technical resistance at the contract high of US$3.53 1/2 per bushel, a technical analyst said. The bear's next near-term downside price objective remains closing prices below solid support at US$3.25, he adds.

 

First resistance for December corn is seen at the contract high of US$3.53 1/2 and then at US$3.59. First support is seen at US$3.45, and then at US$3.41 1/4.

 

Cash corn basis bids were unchanged to higher Wednesday. Central Illinois was up 2 cents at 13 cents over the December future.

 

In other corn news, China's corn exports declined 68.7% on year to 2.37 million metric tonnes in the January-to-October period, the country's General Administration of Customs reported Wednesday.

 

China's government may issue higher-than-expected corn export quotas over the next several days as the shipment dates of several corn export orders won by Chinese traders come to a close, a China-based analytical firm said in a report Wednesday.

 

Unless the federal government allots traders a specific export quota, Chinese traders can't ship corn out of the country. Chinese exporters have stepped up corn export sales recently on the increase in corn price this fall, said commodity firm JCI Shanghai.

 

Ukraine harvested 5.429 million metric tonnes of corn as of Nov. 7 with an average yield of 3.7 tonnes per hectare, the agriculture ministry reported Wednesday. Ukraine said that this year's harvest is unlikely to exceed 6.0-6.5 million metric tonnes due to hot and dry weather.

 

Corn futures at China's Dalian Commodities Exchange settled higher on spillover from stronger CBOT corn prices Tuesday and higher spot market prices, sources said. The May contract rose RMB/13 to RMB 1,522/tonne.