February 15, 2007

 

CBOT Corn Outlook on Thursday: Firmer Following Overnight Trade

 

 

A firmer start is expected Thursday for corn futures at the Chicago Board of Trade following overnight strength, analysts said.

 

Most-active March is called to open 2 to 3 cents firmer.

 

In e-cbot trade, March corn gained 4 1/4 cents to US$4.12 1/2 a bushel.

 

The U.S. Department of Agriculture said late Wednesday the weekly export sales data normally released on Thursday will be delayed until Friday because of the mid-week winter storm in Washingtonne.

 

A technical analyst said March corn bulls still have upside technical momentum, hitting a four-week high Wednesday, but settling weaker after mild profit-taking. Bulls have an upside target of US$4.20 1/2, the contract high, while bears seek a close below solid chart support at last week's low of US$3.91 1/2.

 

Vic Lespinasse, floor broker for AG Edwards, said he expected a firmer start, citing the overnight strength. "I'm surprised we sold off the way we did yesterday. Some of it was fund selling. If the funds aren't selling I think we'll see corn recovering," Lespinasse said.

 

He noted strength in outside markets could be mildly supportive, with New York Mercantile Exchange crude oil and U.S. metals futures prices higher. A softer dollar is also "constructive" he said.

 

Otherwise, he said, the fundamental news for corn is wanting. The markets now are focused on the coming USDA Agriculture Outlook Forum, which is to take place March 1-2. At the time USDA will release its views for the coming year.

 

The European Union will likely have a surplus of corn in the 2007-08 balance sheet, entirely located in Hungary, according to an analytical report by Strategie Grains published Thursday. France's corn situation has a slim balance between supply and demand, leaving that country's market "extremely sensitive" to price differences compared with other grains such as wheat and barley and movement on the world corn market.

 

"This really isn't anything we didn't already know," Lespinasse said.

 

In other news of interest, South Africa's government is considering special farm taxes and other legal measures to persuade big landowners to redistribute their land in favor of the poor, Agriculture Minister Lulu Xingwana said Thursday.

 

Xingwana wants to settle all remaining land claims by 2009 and to impose a six month limit on negotiations. Xingwana stressed there would be no land grabs like in neighboring Zimbabwe. South Africa is a sizable corn exporter.