January 25, 2008

 

CBOT Corn Outlook on Friday: Up 6-8 cents on follow-through, overnight gains

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 6 to 8 cents higher Friday, supported by Thursday's limit up gains and spillover from additional price strength in the overnight session, analysts said.

 

In overnight electronic trading, March corn gained 8 1/2 cents to US$4.97 3/4 cents per bushel. Electronic trading volume in March was 9,807 contracts.

 

The market should be higher to start, a commission house analyst said. Corn rallied to limit up Thursday and was strong in the overnight session as well which should result in a higher opening, the analyst said.

 

The stock markets have stabilized as fears of a global recession have faded and the outside commodity markets are higher and should also underpin the grains, the analyst said. Crude oil, silver and gold are all holding good gains in early trading.

 

Weekly export sales were good as demand for U.S. corn continues, a trader said. The U.S. Department of Agriculture reported that weekly corn export sales totaled 1.715 million metric tonnes for the week ended Jan. 17, within the 1 million to 2 million tonnes expected by analysts. Included in the total were 119,700 tonnes for delivery in the 2008-09 marketing year.

 

In addition, the USDA reported that 152,400 metric tonnes of U.S. corn had been sold to Japan and 120,000 tonnes sold to South Korea, both for delivery in the 2007-08 marketing year.

 

In Argentina, scattered showers and cooler temperatures are expected to ease crop stress in the western growing belt in the near-term and the forecast for next week does not look as dry or hot as in previous outlooks, DTN Meteorlogix Weather said. Scattered showers and thundershowers with amounts of 0.25 to 1.00 inch and locally heavier are forecast for Friday and Saturday, Meteorlogix Weather said.

 

On daily technical charts, March corn settled limit up, 20 cents higher as bargain hunting and short-covering were the features, a technical analyst said. Follow through buying Friday would provide market bulls with fresh upside near-term technical momentum and help repair recent chart damage, the analyst said. The bull's upside objective remains closing prices above psychological resistance at US$5.00 per bushel, with the next downside price objective closing prices below support at this week's of US$4.69.

 

First resistance for March corn is seen at US$4.95, and then at US$5.00. First support is seen at US$4.80 and then at US$4.75.

 

In other corn news, China is unlikely to become a net importer of corn in 2008 despite increased demand, said the country's deputy director of the country's Department of Rural Economic Development Research under the State Council's Development Research Center. He did note that China could become a net importer after this year with domestic consumption steadily rising.

 

India may export 1 million to 1.5 million metric tonnes of corn in the first three months of this year as China's absence from the corn export market over the past several months has created demand for Indian corn in East Asia and the Middle East, said Amol Sheth, president of the All India Starch Manufacturers Association.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark Sept. contract up RMB10 at 1,738RMB/tonne.