January 5, 2007

 

CBOT Corn Outlook on Friday: Called 1-2 cents higher on overnight gains

 

 

Chicago Board of Trade corn futures are predicted to begin trading 1 to 2 cents higher Friday, following the gains established in overnight activity and on short covering ahead of the weekend after losses set this week, sources said.

 

In overnight e-CBOT trading, March corn rose 1 1/4 cents at US$3.63 1/2 per bushel and May gained 1 3/4 cents to US$3.73 1/2. e-CBOT volume in March was 7,162 contracts.

 

Corn should start out higher on spillover from the overnight trade and short covering after price declines this week, but could see additional weakness if technical selling resumes and if farmer sales of cash corn picks up, a commission house analyst said.

 

Traditionally, cash corn sales increase after the first of the year.

 

March corn has declined 28 cents from last Friday's settlement.

 

The U.S. Department of Agriculture reported weekly corn export sales totaled 573,500 metric tonnes for the 2006-07 marketing year for the period ending Dec. 28. Analysts had expected sales between 700,000 and 1.0 million metric tonnes. In addition, sales for 2007-08 were a negative 35,400 tonnes.

 

Egypt, Japan and Mexico were the largest buyers on the week.

 

Sales were poor and under expectations, however it was a holiday week so the sales shouldn't have much impact, a floor trader said.

 

Activity should be two-sided with position squaring ahead of the weekend and before next week's reports providing some support, but if the outside markets are weak it could impact corn, the trader added.

 

On day session open auction technical charts, March corn closed near the session low and hit a six-week low, with a bearish double-top reversal chart pattern possibly forming in corn, a technical analyst said.

 

The bull's next upside objective is to fill this week's downside price gap, pushing prices back above US$3.87 1/2 in March. The bears' near-term price objective is closing prices below support at US$3.47 1/2, the bottom of an upside price gap created in November, the analyst said.

 

First resistance for March corn is seen at US$3.65 and then at US$3.70, with first support at US$3.60 1/2 and then at US$3.57 1/2.

 

Cash corn basis bids were mostly higher Friday. Central Illinois was up 1 cent at 4 cents under March.

 

In other corn news, corn futures on China's Dalian Commodity Exchange settled higher on fresh buying interest sources said. The most active September contract rose RMB1 to finish at RMB1,678.

 

India's planted corn acreage totaled 707,600 hectares as of Jan. 5 versus 1.01 million last year, the Indian government reported Friday.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the weekly commitment of traders data for the period ending Jan. 2.