February 23, 2007

 

CBOT Corn Outlook on Friday: Down 1-3 cents on e-CBOT, light profit taking

 

 

Chicago Board of Trade corn futures are seen starting Friday's day session modestly lower, in tune with overnight price action with traders expected to take profits from recent price strength.

 

Analysts expect corn to open 1 to 3 cents lower.

 

In overnight electronic trading, March corn ended 2 cents lower at US$4.32 1/2, May corn finished 1 3/4 cents lower at US$4.45 3/4, and December corn was 3 1/4 cents lower at US$4.24 1/2.

 

The market is poised for a minor end of the week setback, with traders banking some profits after strong gains this week, said a CBOT floor analyst.

 

For the week CBOT May corn is up 18 cents and the new crop December future is 14 1/2 cents higher.

 

The market has enjoyed some speculative fund sponsored gains over the course of the week, and early downside movement will be watched closely, as any sign of exhaustion could rekindle technical buying, the analyst added.

 

Lingering concerns over weather uncertainties heading toward spring plantings as well as the debate surrounding if the U.S. can secure enough corn acres to satisfy demand remains a supportive influence to attract speculative buyers, traders added.

 

Meanwhile, futures are overbought and due for some mild consolidation heading into the weekend, analysts said. The Relative Strength Index as of Thursday's close for May corn stands at 78.05 and 84.07 for December corn. A RSI reading above 70.00 is considered overbought.

 

A technical analyst said while market bulls have solid upside technical momentum the corn market is now short-term technically oversold and probably due for at least a mild corrective pullback soon. The next major upside technical price objective for May corn is to produce a close above solid chart resistance at US$4.50. The next downside price objective is producing a close below solid chart support at 4.25.

 

First resistance for March corn is seen at Thursday's contract high of US$4.48 1/4 and then at US$4.50. First support is seen at US$4.45 and then at US$4.40.

 

Otherwise, a quiet news front with export sales falling in line with expectations is expected to keep technical objective in play.

 

U.S. Department of Agriculture said net weekly export sales for corn were 929,900 metric tonnes. 2006-07 sales totaled 839,400 tonnes, down 39% from the prior week and 18% under the prior 4-week average. Trade estimates called for commitments in the 800,000 to 1,100,000 tonne range. The biggest buyers were Mexico, buying 387,000 tonnes, and Taiwan, buying 157,000 tonnes.

 

In other demand news, South Korea's Nonghyup Feed Inc. bought 275,000 metric tonnes of U.S. No. 3 corn from trading house Marubeni for delivery on three dates - June 20, July 15 and August 15, a company official said Friday.

 

On tap for Friday, options on CBOT March futures expire at the close of trading.

 

The DTN Meteorlogix Weather Service forecast said a strong storm is projected for the western Midwest Friday night and Saturday. Heavy snow, ice and rain and possible thunderstorms from north to south across Iowa are expected. Strong winds are also likely. This will likely bring grain transportation to a halt for the weekend and possibly early next week as well depending on how severe the weekend storm is. The Illinois river will see rain develop late Friday night. Snow, ice and rain should be moderate to heavy during Saturday and Saturday night, with strong winds also expected, Meteorlogix forecasts.

 

U.S. Midwest cash corn basis bids were mostly steady Friday, cash traders said. Spot U.S. cash corn bids were down 1-cent in Eddyville, IA., and down 2 1/2 cents in Peoria, Ill.