February 7, 2008

 

CBOT Corn Outlook on Thursday: Steady-1 cent higher, following overnight tone

 

 

Chicago Board of Trade corn futures are predicted to begin day session activity steady-to-1 cent higher Thursday, following overnight activity, consolidating after Wednesday's volatile trade and ahead of Friday's supply/demand reports, analysts said.

 

In overnight electronic trading, March corn rose 3/4 cent to US$5.02 1/4 per bushel while December slipped 1/2 cent to US$5.25 1/4. Electronic trading volume in March was over 16,000 contracts.

 

Corn should trade both sides, with sharply higher wheat futures providing support while export sales were on the lower end of estimates and could limit buying interest, a commission house analyst said.

 

In overnight activity, MGE March spring wheat futures set another all time high, ending limit up at US$15.23 per bushel, the highest price ever recorded for a wheat futures contract. CBOT March wheat ended up 25 3/4 cents at US$10.58 3/4.

 

Weekly corn export sales for the period ending Jan 31 were 1.105 million metric tonnes, the U.S. Department of Agriculture reported, within the 950,000-to-1.4 million tonnes expected by analysts. Included in the total were sales of 75,000 metric tonnes for delivery in the 2008-09 marketing year.

 

The market could also experience some consolidation ahead of Friday's supply/demand report a trader said. The average ending stocks estimate for the 2007-08 U.S. corn crop was 1.411 billion bushels, according to a survey of 15 analysts by Dow Jones Newswires, 27 million bushels below the 1.438 billion estimated by the U.S. Department of Agriculture in January. The report is scheduled for release at 8:30 a.m. EST (1330 GMT).

 

The market will also be interested in a Senate Energy and Natural Resources Committee meeting on the energy market impact from the expanded Renewable Fuels Standard, set for 9:30 a.m. EST, a broker said. Corn is heavily influenced by energy policy given its ethanol component, the broker said.

 

In Argentina's grain growing regions, there continues to be a fair-to-good chance for significant thundershower activity during the next 24-to-48 hours that should favor developing crops, DTN Meteorlogix Weather said. Scattered showers and thundershowers with amounts of 0.30-1.50 inches are expected Thursday and Friday before drier weather returns on Saturday. A few light showers are possible Sunday, Meteorlogix Weather said. Temperatures are forecast near-to-below normal Friday ad below normal Saturday.

 

On daily technical charts, March corn closed lower and nearer the session low after trading to a new contract and 10-year high. March traded in a bearish "outside day" down on daily technical charts and if the market sees follow-through selling on Thursday, then a bearish key reversal down on the chart would be confirmed, a technical analyst said. Price activity Wednesday also produced a potentially bearish buying "exhaustion tail" on the daily bar chart, with Thursday's trading activity in corn extra important, the analyst said. The bull's next upside price objective is to push and close prices above strong resistance at the contract high of US$5.38 3/4 per bushel. The next downside price objective for market bears remains closing prices below solid support at US$4.90.

 

First resistance for March corn is seen at US$5.11 1/4, Tuesday's high and then at US$5.19. First support is seen at Wednesday's low of US$5.00 and then at US$4.95.

 

In other corn news, China's Dalian Commodities Exchange remains closed due to the Lunar New Year holiday.