January 31, 2008

CBOT Corn Outlook on Thursday: 2-3 cents lower on spillover, outside markets

Chicago Board of Trade corn futures are expected to begin day session trading 2-to-3 cents lower Thursday, pressed by spillover from weaker prices in overnight trading, lower equity values and sliding crude oil prices, analysts said.

In overnight electronic trading, March corn fell 3 3/4 cents to US$4.94 3/4 per bushel and December declined 3 cents to US$5.07. Electronic trading volume in March was above 5,246 contracts.

Corn was weaker overnight and should start to the downside at the opening, an analyst said. The stock market is weaker ahead of its day time trading session and crude oil is down more than US$1.00 per barrel which should also act as a drag on corn prices, the analyst added.

Declines could be mitigated by better-than-expected weekly corn export sales, a commission house analyst said. The U.S. Department of Agriculture reported that weekly corn export sales for the period ending Jan. 24 totaled 1.891 million metric tonnes, well above the 900,000-to-1.5 million tonnes expected by analysts. Included in the total were sales of 3.4 million tonnes for delivery in the 2008-09 marketing year. South Korea and Japan accounted for over half of the total. Sales were "very good," a trader said, and should lend some support for the market, though some analysts expected a good week after the recently flurry of announced sales, the trader noted.

Favorable growing weather in Argentina and forecasts for the potential for additional rain in the near-term could also act as a drag on corn prices, the commission house analyst said.

In Argentina, short range weather maps feature a new cold front for Saturday which could lead to a chance for showers and cooler weather in the five-day period, DTN Meteorlogix Weather said. There is a chance for a few showers Friday, with additional scattered light showers with locally heavier amounts Friday night into Saturday, favoring central and eastern areas. Temperatures are expected to average near-to-below normal in the period.

On daily technical charts, March corn closed lower and at mid-range as the market is currently "pausing," a technical analyst said. The next upside price objective is to push and close prices above solid resistance at US$5.06 3/4, this week's high. The next downside price objective is closing prices below solid support at US$4.90.

First resistance for March corn is seen at Wednesday's high of US$5.01 1/2, and then at US$5.06 3/4. First support is seen at US$4.94 1/2 and then at US$4.90.

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark Sept. contract down RMB/5 at 1,744RMB/tonne.