February 1, 2007

 

CBOT Corn Outlook on Thursday: Up 3-4 cents; e-CBOT; underlying bullish theme

 

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's session on firm footing, taking its lead from overnight action, with underlying bullish perspectives and technical strength supportive features.

 

Analysts expect corn to open 2 to 3 cents higher.

 

In overnight electronic trading, March corn ended 3 3/4 cents higher at US$4.07 3/4, May corn finished 3 1/4 cents higher at US$4.19, and December corn was 3 1/2 cents higher at US$3.98 1/4.

 

The market is bulled up on long-term fundamental outlooks, analysts said. A quiet news front is expected to keep technical objectives in favor, with talk of fresh speculative money flowing into the market to start the month keeping sellers at bay, analysts added.

 

Outside markets are providing little direction in early trade, but any significant move in energies and metals will influence price direction in the absence of fresh news, traders said.

 

A technical analyst said recent price action has formed a fledgling downtrend channel on the daily bar chart, but corn bulls still have the near-term technical advantage. No serious chart damage has occurred recently, but market bulls would gain better upside technical momentum by producing a close above chart resistance at US$4.10 basis March futures. The next downside price objective is producing a close below solid chart support at US$3.92.

 

First resistance for March corn is seen at US$4.05 and then at Wednesday's high of US$4.09 1/4. First support is seen at Wednesday's low of US$4.03 1/4 and then at US$4.00.

 

The cold wave gripping the central U.S. is expected to increase livestock feedings and should provide some underlying support to corn prices. However, futures have settled into a comfortable range, amid ideas recent fundamental changes are adequately factored into prices. This is seen promoting a sideways trend, with the upside favored on ideas the market's bullish sentiment will not attract significant sellers until some fresh inputs surface to offset the supportive theme, a CBOT floor analyst said.

Meanwhile, the U.S. Department of Agriculture said net weekly export sales for corn were 798,800 metric tonnes. 2006-07 sales totaled 797,300 tonnes, down 20% from the prior week and 23% under the prior 4-week average. Trade estimates called for commitments in the 600,000 to 1,000,000 tonne range. The biggest buyers were Japan, buying 325,400 tonnes, and Mexico, buying 116,000 tonnes.

 

In other demand news, Taiwan Sugar Corp. bought a combination cargo of 23,000 metric tonnes of U.S. corn and 12,000 tonnes of U.S. soybeans, for March 8-22 delivery from trading house Marubeni Thursday, a trader in Taipei said.

 

The DTN Meteorlogix weather forecast said the US and European models are in good agreement through the 10 day period. The very cold weather pattern continues for the north Plains and the Midwest for another 7 days, with temperatures cold but not as cold during days 8-10.

 

In Argentina, a drying trend continues during the next seven days with some hot weather possible at times. Some increasing stress to crops is expected. Temperatures will average near to above normal through major corn areas with highs ranging from the upper 80s to the low 90s, Meteorlogix reports.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled higher, with the benchmark September contract up RMB7 at RMB1,716/tonne.