January 18, 2007

 

CBOT Corn Outlook on Thursday: Seen 7-8 cents higher following e-CBOT gains

 

 

Chicago Board of Trade corn futures are forecast to start trading 7-to-8 cents higher Thursday, following gains set in overnight trade and the lack of bearish news out overnight, sources said.

 

In overnight e-CBOT trading, March corn gained 7 1/2 cents to US$4.15 1/2 cents per bushel and May rose 8 cents to US$4.27. e-CBOT volume in March was 9,748 contracts.

 

Corn was higher overnight as the late selling in Wednesday's day session was didn't materialize, a floor trader said. The key is that corn prices haven't begun to ration demand.

 

After Friday's U.S. Department of Agriculture reports, corn is in a demand rationing market and the rationing hasn't occurred. It looks like the late selling on Wednesday was index fund related. If the index funds have finished rebalancing, who is going to sell corn, the trader said.

 

The goal of the market is to get the price of corn high enough to slow down ethanol expansion and the market has not done that yet, said Don Roose, president of US Commodities in West Des Moines, Iowa. However, the recent high in March could be hard to overcome and the market could be zeroing in on an intermediate top that it will have to work through, he noted.

 

On day session open auction technical charts, March corn set another all-time high but backed off and closed near the session low, a technical analyst said. Despite this, the bulls are still in control, although Wednesday's trade suggests choppy near-term trade between the Wednesday's high of US$4.20 1/2 and solid support at US$3.90, he said.

 

First resistance in March is seen at US$4.16 1/2 and then US$4.20 1/2. First support is pegged at US$4.05 1/4 - Wednesday's low - and then at US$4.00.

 

Cash corn basis bids were mixed Thursday. Central Illinois was up 2 cents at 5 cents under March.

 

In other corn news, soaring corn prices are forcing Mexico's Economy Ministry to work extra to release the 2007 main yellow corn import quota out ahead of the normal schedule, the National Agriculture Council, or CNA, said Wednesday.

 

China's Jilin province plans to auction over 300,000 metric tonnes of corn Saturday in a public auction. This had little impact on China's corn futures market as the amount to be sold is small, sources said.

 

Corn futures prices on China's Dalian Commodities Exchange settled higher, following the gains in CBOT corn, sources added. The most-active September contract ended up RMB/5 at RMB1,758/tonne.