Corn futures on the Chicago Board of Trade ended higher on Friday amid support from USDA's October crop production report and from the government's weekly export sales report, traders said.
"We reacted to the production number and I can't get too excited about corn when you look at the carryout but they wanted to focus on production. That, and we had a good solid export number," said Shawn McCambridge, analyst for Prudential Financial.
Traders said corn also was supported by unwinding of wheat/corn and soy/corn spreads. CBOT corn closed 4 to 7-3/4 cents per bushel higher, with December up 7-1/4 at $3.51 per bushel. Traders said the USDA forecast for 2007 corn output at 13.3 billion bushels, although a record high, was below an average of analysts' estimates for 13.5 billion. And the USDA said US corn export sales last week totalled 2,319,800 tonnes, sharply above estimates for 700,000 to 1,100,000 tonnes.
The USDA's corn production number reflected a 700,000 planted acreage increase but USDA cut its yield estimate to 154.7 bushels per acre from 155.8 forecast last month. "This has to be a surprise to the trade," said Joe Victor, analyst with Allendale Inc, an Illinois-based commodities company.
James Barnett, analyst for MF Global, said the corn production forecast should boost CBOT corn prices. "They cut the corn yield per acre 1 bushel, which is a surprise because everybody was expecting a 1 to 2 bushel per acre increase, Barnett said.
On a bearish note, USDA forecast US 2007/08 corn ending stocks at 1.997 billion bushels, above an average of analysts' estimates for 1.965 billion and above USDA's forecast in September for 1.675 billion. Barnett and Jack Scoville, analyst for Price Futures Group, said that old-crop corn prices have limited upside potential from the current CBOT futures price levels of roughly $3.40-$3.80 per bushel because USDA also trimmed its outlook for corn to be used by feeders and as fuel by ethanol plants.
"For old-crop the lows we saw in September will probably hold ... we could trade back up to the $3.80 to $3.85 level or a little higher," Scoville said. "The ending stocks for corn are now near 2.0 billion bushels which are adequate supplies so there is limited upside price projections," he said.
USDA cut its estimate of the China corn crop to 143.0 million tonnes, below its estimate in September for 147.0 million, a move that should give some added support to the corn futures market. Technical traders saw the December contract break above resistance at its 50-day moving average of $3.52 per bushel to a session high of $3.58 which was that contract's 20-day MA. Strong resistance was noted there. The nine-day relative strength index closed at 48. Oat futures were up 2-1/4 cents to down 1 cent per bushel, with December up 2-1/4 at $2.77 per bushel.