February 12, 2007

 

CBOT Corn Outlook on Monday: Up 1-2 cents; carryover from Friday's close

 

 

Chicago Board of Trade corn futures are seen starting Monday's day session higher, following the e-CBOT theme as the market feeds off technical strength from Friday's close.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 3/4-cents higher at US$4.08, May corn finished 1 1/2-cents higher at US$4.19 1/2, and December corn was 2 1/4-cents higher at US$4.01 1/2.

 

In the absence of fresh fundamental news, technical factors will influence early price direction, with a supportive close Friday underpinning futures, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The trade will keep an eye on export inspections for signs of any slowdown in demand, particularly with the U.S. Department of Agriculture not reflecting any demand rationing occurring in Friday's supply and demand report, Roose added.

 

Otherwise, traders expect futures to continue to chop around in recent trading ranges, with analysts not expecting any breakout in either direction until fresh news or acreage estimates can be confirmed heading into spring plantings.

 

Looking ahead, the trade will watch the release of the USDA baseline projections Wednesday for indications on future expectations for grain supply and demand, said Roose.

 

A technical analyst said a downtrend channel on the daily bar chart has been penetrated on the upside and negated. Corn 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 last week's low of US$3.91 1/2.

 

First resistance for March corn is seen at US$4.10 and then at US$4.15. First support is seen at US$4.00 and then at Friday's low of US$3.97 1/2.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 343,558 combined corn futures and options contracts as of Feb. 6, down from 350,009 the prior week. Traditional large speculative traders were net long 269,492 contracts compared with net longs of 279,943 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 546,863 contracts, down from the previous week's 564,514 contracts.

 

On tap for Monday, the USDA is scheduled to release its weekly export inspection report at 11 a.m. EST.

 

U.S. Midwest cash corn basis bids were mostly steady Friday, cash traders said. Spot U.S. cash corn bids were up 2 cents in Cedar Rapids, Iowa, up 3 cents in Peoria, Ill., and down 2 cents in Evansville, Ind.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled mostly lower. The September corn contract settled unchanged at RMB1,713/tonne. Expectations of a slowdown in overall economic growth put downward pressure on commodity futures prices, analysts said. The Chinese government expects the country's gross domestic product growth to slow down this year from a 10.7% rise in 2006, the most rapid annual growth since 1995.

 

Meanwhile, China's January corn exports more than doubled from a year earlier to 940,000 metric tonnes, according to preliminary data issued by the General Administration of Customs Monday.