February 3, 2006

 

CBOT Corn Outlook on Friday: 1-2 cents higher on e-CBOT, follow through

 

 

Corn futures at the Chicago Board of Trade are expected to begin open auction trading 1-2 cents higher on Friday on stronger prices in overnight electronic trading and follow through from Thursday's firm close, sources said.

 

In overnight e-CBOT trading, March corn gained 1 cent to $2.21 1/2 per bushel, May corn rose 1 1/4 cents to $2.31 1/2, and July corn added on 1 3/4 cents to $2.41.

 

Corn should start out at firm levels with follow through from yesterday and firm overnight prices helping to support the market, said Don Roose, president of US Commodities in West Des Moines, Iowa. The hard red wheat market helped supply support to corn Thursday and could do so again Friday, he said.

 

Fundamentally there isn't much right now to support the market, but the funds are technically oriented and are supporting the market, he said.

 

It's a technically driven market, led by the funds, a floor analyst said. The market should start firm and after that prices will be determined by the funds and what they want to do, the analyst added.

 

Corn is stuck between a positive wheat market and a negative soybean market. The dryness in the plains is supporting wheat but rainfall in Argentina is a negative for soybeans, the analyst said.

 

Scattered showers and thundershowers are predicted into the weekend in Argentina with expected totals of .30-1.50 inches expected, DTN Meteorlogix weather said. Mostly dry conditions are expected Monday through Thursday next week with temperatures near to below normal.

 

On technical charts, recent price action could be producing a bullish pennant or bull flag pattern on the daily bar chart, a technical analyst said. This week's high of $2.22 in March remains strong overhead technical resistance. First resistance for March corn is seen at $2.21, Thursday's high and then at $2.22. First support is seen at $2.17, and then at $2.15 1/4, this week's low, the analyst said.

 

Corn futures open interest at the Chicago Board of Trade, rose by 14,015 contracts on Thursday according to preliminary data released by the exchange, continuing its string of open interest records. Corn open interest now stands at 997,522 contracts.

 

The U.S. Department of Agriculture reported Friday morning that 116,000 metric tonnes of U.S. corn had been sold to unknown destinations in the 2005-06 marketing year.

 

In other corn news, Argentina's cash corn prices closed at slightly higher levels in the week ended Thursday, a local trader said. Farmers had planted 99% of the 2005-06 corn crop by Saturday according to the Buenos Aires Exchange.

 

The USDA forecast the 2005-06 Argentine corn output at 16.8 million tonnes, but local analysts say the forecast is too high. The Argentine Corn Association, or Maizar, estimates production at 14 million metric tonnes in 2005-06 and the Agriculture Secretariat forecasts production between 13 million and 14 million metric tonnes. Last year the USDA estimated Argentinean production at 19.5 million metric tonnes.

 

In China, the Dalian futures exchange is closed this week due to the Lunar New Year holiday. Trading will resume on Feb. 6.

 

On Friday afternoon after the close, the Commodity Futures Trading Commission will release the commitment of traders report as of Jan. 31.

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CST.