January 18, 2008

 

CBOT Corn Outlook on Friday: Down 3-5 cents on technical weakness, profit-taking

 

 

Corn futures on the Chicago Board of Trade are expected to open Friday's day session on the defensive, taking their cue from overnight trade, with carryover weakness from Thursday's close impacting prices as well.

 

Analysts expect corn to open 3 to 5 cents lower.

 

In overnight electronic trading, March corn was 5 cents lower at US$4.97, May corn was 4 3/4 cents lower at US$5.10, and December corn was 5 cents lower at US$5.16.

 

The market performed poorly from a technical standpoint Thursday, with its inability to hold Thursday's highs a sign of possible intermediate highs being in place, a commodity analyst said.

 

Thursday's poor technical close should spill over over into Friday's trade, with profit-taking once again featured heading into an extended holiday weekend, he added.

 

CBOT markets will be closed Monday in observance of Martin Luther King Jr. Day.

 

Meanwhile, choppy, volatile trade is a possibility as well, with supportive underlying fundamentals, and acreage uncertainties remaining underpinning influences to limit the downside pressure, analysts said.

 

A technical analyst said a three-month-old uptrend is still in place on the March corn daily bar chart. The next major upside price objective is to push and close prices above solid resistance at the contract high of US$5.19 a bushel. The next downside price objective is to produce a close below solid support at US$5.00.

 

First resistance for March corn is seen at US$5.06 and then at US$5.10. First support is seen at US$5.00 and then at this week's low of US$4.96 3/4.

 

The DTN Meteorlogix Weather Service said a weak trough may lead to a few thundershowers in the driest areas of Argentina's La Pampa and southwest Buenos Aires early next week. However, this isn't expected to change the situation significantly, as they predict warmer, drier weather returning for the balance of the period.

 

In demand news, the U.S. Department of Agriculture announced Friday private export sales of 101,600 metric tonnes of corn for delivery to Japan in the 2007-08 marketing year.

 

In other news, the CME Group (CME) raised its minimum margins for CBOT corn, exchange officials said Thursday. The changes came about "as per the normal review of market volatility to ensure adequate collateral coverage," the CME said.

 

Corn initial margins were raised to US$1,283 per contract from US$1,080. Maintenance margins were raised to US$950 from US$800. The changes took effect at the close of business Thursday.