January 17, 2008

 

CBOT Corn Outlook on Thursday: Up 3-5 cents on rebound, outside markets

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 3 to 5 cents higher Thursday, underpinned by ideas that Wednesday's weakness was overdone, higher outside markets and strong export sales, a commission house analyst said.

 

In overnight electronic trading, March corn gained 5 1/4 cents to US$5.07 3/4 per bushel. Electronic trading volume in March was 5,240 contracts.

 

Corn was stronger in overnight trading on ideas that Wednesday's declines were overdone, which should underpin values during daytime trade, the commission house analyst said. Spillover from expected higher prices in both soybean and wheat futures should also add to the supportive tone, he said.

 

Soybeans are called to open 13 to 15 cents higher and wheat is expected to open up 10 to 12 cents higher.

 

Firm crude oil and precious metals prices and lighter-than-expected rainfall overnight in Argentina are also supportive, a trader said.

 

Dry weather - with only a few light showers and locally heavier amounts - is forecast in northern areas of Argentina Thursday night into Friday, DTN Meteorlogix said. Mainly dry weather is expected through Sunday, with widely scattered thundershowers seen for Monday and Tuesday. Temperatures are predicted to average above normal Sunday and Monday, Meteorlogix said.

 

Weekly corn export sales were "huge" and should also underpin prices, an electronic trader said.

 

Corn export sales were 2.369 million metric tonnes for the week ended Jan. 10, a marketing year high, the U.S. Department of Agriculture reported. Analysts had expected sales between 1.4 million and 2.4 million tonnes. In addition, 120,000 tonnes were reported sold for delivery in the 2008-09 marketing year.

 

On daily technical charts, March corn gapped open lower and formed a bearish "island top" with Wednesday's gap trade following Friday's gap higher trade on the chart, a market technician said. Strong follow-through selling Thursday would help confirm that bearish formation. Trading activity Wednesday also confirmed a bearish "key reversal" day, which is an early technical clue that a near-term top is in place. The bulls' next major upside objective remains pushing and closing prices above solid resistance at the contract high of US$5.19. The next downside objective for the bears is to produce a close below US$5.00.

 

First resistance for March corn is seen at US$5.06, and then at US$5.15. First support is seen at Tuesday's low of US$5.00 and then at Wednesday's low of US$4.96 3/4.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled modestly lower, with the benchmark September contract RMB3 lower at RMB1,794 a tonne.