February 8, 2007

 

CBOT Corn Outlook on Thursday: Up 1-2 cents; influenced by overnight theme

 

 

Chicago Board of Trade corn futures are seen starting Thursday's day session modestly higher, taking its lead from overnight influences as the market attempts to find support after recent losses.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 3/4-cent higher at US$3.94, May corn finished 1 1/2-cent higher at US$4.06, and December corn was 1/2-cent higher at US$3.91 1/2.

 

The market is looking to try and hold in a support zone, as the absence of follow through selling in the overnight session provides optimism for a technical push after futures satisfied near term downside objectives in Wednesday's trade, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Underlying market strength remains tied to bullish demand prospects, with solid weekly sales showing rationing of exports has yet to emerge, analysts said. Nevertheless, technical factors will once again play an integral part in market activity, as any signs of buying or selling exhaustion could send prices reversing in either direction.

 

Otherwise, the market has few fresh directives, with export sales falling in line with expectations and outside markets little changed. Trade positioning ahead of Friday's supply and demand reports and the rolling of March positions are seen as underlying themes in Thursday's session, analysts said.

 

A technical analyst said prices have fallen to a key technical support level and follow-through selling pressure on Thursday would begin to produce some near-term technical damage. Recent price action has formed a downtrend channel on the daily bar chart, but the corn bulls still have the overall near-term technical advantage. The market would gain fresh upside technical momentum by producing a close above chart resistance at US$4.05 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$3.95 and then at US$4.00. First support is seen at Wednesday's low of US$3.91 1/2 and then at US$3.90.

 

Meanwhile, the U.S. Department of Agriculture said net weekly export sales for corn were 917,300 tonnes, up 15% from the prior week, but 16% under the prior 4-week average. Trade estimates called for commitments in the 700,000 to 1,000,000 tonne range. The biggest buyers were Mexico, buying 314,100 tonnes, and Japan, buying 309,600 tonnes.

 

The USDA will release its updated supply and demand projections Friday 8:30 a.m. EST (1330 GMT). The average of trade estimates from analysts surveyed by Dow Jones Newswire peg U.S. corn ending stocks at 762 million bushels, Up 10 million from January's estimate. The range of estimates span from 702 million bushels to 852 million bushels.

 

U.S. Midwest cash corn basis bids were mostly steady Thursday, cash traders said. Spot U.S. cash corn bids were up 2 cents in Cedar Rapids, Iowa., down 2 1/2 cents in Peoria, Ill, and up 1-cent in Evansville, Ind.

 

The DTN Meteorlogix weather forecast said weather models have again backed off predictions of widespread thunderstorms for Argentine growing areas during the Sunday-Monday time period. This makes for highly uncertain forecasts. It is still possible that the models will come back on this again tomorrow.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower on poor feed demand. The market expects feed demand to become stronger in June, instead of the previous March estimate, due to the slow recovery of the livestock feed Industry, analysts said. The September corn contract fell RMB5 to RMB1,709/tonne.