January 26, 2007

 

CBOT Corn Outlook on Friday: Mixed; looking for direction

 

 

Chicago Board of Trade corn futures are seen starting Friday's day session trade mixed, chopping around, looking for direction amid the absence of fresh market moving news.

 

In overnight electronic trading, March corn ended unchanged at US$4.07 and May corn finished 1/4 cent lower at US$4.17 3/4.

 

A quiet news front is expected to keep technicals in focus, producing choppy, potentially volatile activity, said a CBOT floor analyst. Traders will keep a close eye on where large specs and commercial traders show up for possible clues to direction, he added.

 

End of the week position evening will aide the mixed tone, but analysts say March futures remain firmly underpinned near the US$4.00 level. However, upside movement remains capped by a lack of news to feed bullish appetites, but bullish long range outlooks will keep a floor under prices as well, a floor trader said.

 

A technical analyst said Thursday's close near the session high and finish on the upside of Wednesday's downside price gap basis March futures on the daily chart is keeping corn bulls in firm technical command. A bull flag or bullish pennant pattern still could be forming on the daily bar chart.

 

First resistance for March corn is seen at Thursday's high of US$4.07 1/2 and then at US$4.10. First support is seen at US$4.05 and then at US$4.00.

 

U.S. Midwest cash corn basis bids were mostly steady Friday, cash traders said. Spot U.S. cash corn bids were up 1 cent in Cedar Rapids, IA, down 2 cents in Peoria Ill, and down 2 cents in St. Louis, MO.

 

The DTN Meteorlogix weather forecast said showers and cooler weather for the short range favors developing crops in Argentina. Long range charts are more uncertain as hot weather may return to the growing areas.

 

In other news, China is seen stabilizing and increasing the country's grain output in 2007, Premier Wen Jiabao said Friday. China will improve the macro controls of its grain market, Wen said at a State Council meeting on preparations for the government's 2007 work report to be presented to the country's congress in March, according a statement on the government's official Web site.

 

Meanwhile, soaring demand for corn used to produce ethanol has hog farmers bracing for higher feed prices that threaten to put some producers out of business. Hog farmers at the Iowa Pork Congress seminar Thursday said, if the country is going to meet the ethanol industry's corn needs, hog farmers are going to have to cut back on feed, and cut back on food.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower, as the market expects farmers to grow more corn this year due to its high prices, analysts said. The September contract settled RMB8 lower at RMB1,700/tonne.