February 16, 2007

 

CBOT Corn Outlook on Friday: Mixed start after unchanged overnight

 

 

Chicago Board of Trade corn futures are called to open mixed after directionless overnight trading and with some support expected in the old crop from strong export sales, analysts said.

 

In e-cbot overnight trade, March corn ended unchanged at US$4.07 1/2 per bushel.

 

The U.S. Department of Agriculture reported weekly corn export sales for the week ended Feb. 8 totaled 1,386,400 metric tonnes, above trade expectations. The sales were 51% above the previous week and 34% over the prior four-week average

 

Analysts had predicted sales would be 700,000 to 1 million tonnes.

 

Major buyers included Japan, which bought 684,400 tonnes, and Guatemala, which took 185,700 tonnes.

 

The solid sales will likely give some strength to old crop prices, said John Kleist, senior analyst with Top Third Ag. Strong demand has prevented corn from seeing a more serious price break in recent trading action, he noted.

 

And, despite showing some weakness Thursday, corn bulls still have some upside technical momentum, a technical analyst added.

 

The next upside objective for the bulls is to produce a close above the contract high of US$4.20 1/2. Bears' 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 this week's high of US$4.13 3/4 and then at US$4.17. First support is seen at Thursday's low of US$4.05 and then at this week's low of US$4.03.

 

Looking at the weather, dryness and above-normal temperatures will increase stress to reproductive and filling maize through South Africa during the next five to seven days, especially in the western areas, according to DTN Meteorlogix.

 

In South America, conditions are generally favorable for developing corn through center-south Brazil, although drier weather would benefit, according to DTN Meteorlogix. Some beneficial rainfall has occurred across northeastern Brazil at times during the past week, the weather firm noted.

 

In Argentina, near normal to below normal temperatures and some shower activity through central corn areas will maintain generally favorable conditions for the developing crop, Meteorlogix said. Beneficial rains should fall Friday, the firm reported.

 

Argentine cash corn prices were down on the week at the Rosario Grain Exchange on Thursday as prices dipped to ARS390 per tonne from ARS395 a week ago. Volume totaled 12,000 tonnes. Offers were lower on the rapidly approaching start to the harvest season, the Rosario Grain Exchange said.

 

In China, grain prices will largely remain stable this year, although prices are likely to fluctuate due to a domestic supply imbalance and high international prices, said a consulting body backed by the country's top economic planner.

 

Corn prices are likely to consolidate at high levels and rise further in 2007, although brief declines are possible, the price-monitoring center under the National Development and Reform Commission said in a report Friday.