January 19, 2006

 

CBOT Corn Outlook on Thursday: 1/2-1 cent higher on position squaring

  

 

Corn futures at the Chicago Board of Trade are expected to start trading Thursday slightly higher on position squaring after recent price weakness, sources said.

 

In overnight e-CBOT trading, March corn rose 1/2 cent to US$2.06 1/4 per bushel, May corn gained 1/2 cent to US$2.16, and July corn also rose 1/2 cent to US$2.24 3/4.

 

Corn looks a little oversold and it could see some support from position squaring as traders cover their short positions, a floor analyst said.

 

There is not much fresh news, but corn could draw some support from other markets, a commission house broker said. Precious metals are higher and it's due for an oversold bounce, he added. The market remains at the mercy of the funds in the absence of fresh news, he added.

 

In the last three trading sessions, March corn has declined almost 8 cents.

 

Mainly dry conditions are forecast from Thursday through Saturday in much of Argentina, with temperatures turning warmer to hotter during the period, DTN Meteorlogix weather said.

 

Cash corn basis bids were mostly unchanged Thursday morning. Central Illinois was unchanged at 3 cents over the March; with St. Louis was 1 cent higher, at 5 cents over the March future.

 

On technical charts, corn price direction this week has seen a bearish downside "breakout" from a bearish descending triangle pattern on the daily bar charts, a market technician said. Recent price weakness appears to be an early visit from the "February break" seasonal weakness phenomenon, he added. First resistance for March corn is pegged at US$2.07, Wednesday's high and than at US$2.08 1/4, the top of Wednesday's downside price gap on daily bar charts. First support is seen at Wednesday's low of US$2.05 and then at US$2.04.

 

In other corn news, farmers in South Africa are expected to plant 1.55 million hectares of corn in the 2005-06 season, down from the 2.81 million hectares planted in 2004-05, which produced 11.45 million metric tonnes of corn, the National Crop Estimates Committee said Thursday.

 

Turkey is seeking to sell up to 310,000 metric tonnes of grain in an export tender set to close Jan. 24, and includes 85,000 metric tonnes of corn, according to Turkey's Grain Board.

 

Ukraine exported 7.611 million metric tonnes of grain harvested in 2005 through Jan. 12, the agriculture ministry reported Thursday. Included in the total was 1.088 million tonnes of corn. In addition, corn stocks held by Ukraine's storage facilities were 2.594 million metric tonnes of corn, the agriculture ministry said.

 

The EU will produce 49.8 million metric tonnes of corn in 2006-07, up 1% on the year, according to Strategie Grains, a monthly agricultural report that was released Thursday.

 

Corn futures traded on China's Dalian Futures Exchange settled mostly lower Thursday on long liquidation, sources said. The most active July contract declined RMB1, ending at RMB1,328/tonne.