January 4, 2008

 

CBOT Corn Outlook on Friday: Down 1-2 cents on profit-taking, lower e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start day session activity 1 to 2 cents lower as weaker prices in overnight trade and light profit taking is expected to weigh on prices, analysts said.

 

In overnight electronic trading, March corn fell 2 cents to US$4.64 per bushel. E-CBOT volume in March was 5,471 contracts.

 

Corn should open weaker on light profit taking and the modest losses set in overnight activity, a commission house analyst said. There was no fresh news out overnight and there could be some profit taking ahead of the weekend and after the recent run-up to fresh 12-year highs, the analyst said.

 

March corn has gained 14 cents since last Friday.

 

It could be a choppy session, a trader said. There is little fresh news out; however, the dollar is lower versus other currencies after a weak employment report and that could support grain prices. Recently speculative money has been establishing positions in commodities, but if it doesn't return the market could set back. However, it remains dry in Argentina and that is a concern to some participants.

 

Weekly corn export sales were termed "poor" by an analyst, but noted that the holidays likely impacted sales. The U.S. Department of Agriculture reported U.S. weekly export sales were 688,500 metric tonnes for the week ended Dec. 27, 51% below the prior week and under the 800,000 to 1.3 million tonnes expected by analysts. Included in the total were cancellations of 12,500 tonnes for delivery in the 2008-09 marketing year.

 

Mainly dry weather is forecast in Argentina Saturday with a chance for thundershowers in southern and eastern Buenos Aires Sunday. Dry with only a few thundershowers are possible in eastern locations on Monday, DTN Meteorlogix Weather said. Temperatures are expected to average near-to-above normal Saturday, above-normal Sunday and quite hot Monday with highs possibly reaching to 100 degrees Fahrenheit, Meteorlogix Weather said.

 

On daily technical charts, March corn closed at a fresh contract high close and 12-year high close as strong outside markets and fund buying boosted corn Thursday, a technical analyst said. An 11-week-old uptrend is in place on the daily bar chart and corn bulls are still powerful technically, the analyst said. The next upside price objective remains closing prices above major psychological resistance at US$5.00 per bushel. The next downside objective is to push prices below solid support at US$4.39.

 

First resistance for March corn is seen at US$4.69 1/2, the contract high and then at US$4.75. First support is seen at US$4.60, Wednesday's low and then at US$4.56 3/4, which is the bottom of this week's upside price gap on the daily open auction chart.

 

In other corn news, China has been buying corn from producers in major producing regions since late last month and plans on buying at least 4 million metric tonnes of corn as "the government needs to replenish its reserves for (implementing) future macro controls," an analyst with a government think tank said Friday. China has sold over 460,000 tonnes of corn from state reserves since early last month out of 2 million tonnes it planned to sell to stabilize feed-meal prices. The State Grain Administration said Friday that China aims to guarantee the stability of its grain prices through more macro controls.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract up RMB/8 at 1,6