February 24, 2006

 

CBOT Corn Outlook on Friday: Up 1/2-1 cent; strong export sales, e-CBOT

  

 

Chicago Board of Trade corn futures are seen starting Friday's session modestly higher, following the overnight theme with strong weekly export sales adding to the supportive tone.

 

In overnight electronic trading, March corn was 1/4 cent higher at US$2.23 1/4, and May corn was 1/2 cent higher at US$2.34 1/4 per bushel.

 

Weekly export sales continue to show strong underlying demand for U.S. corn and with options on March futures set to expire Friday, the market will run for a strike price level, with traders awaiting to see if the March futures can challenge the US$2.25 price level, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Talk of China pulling back from the export arena and strength in outside inflationary markets with crude oil, gold and silver markets all higher early Friday are seen aiding upside momentum as well. Otherwise, the liquidation of March positions heading toward first notice day Feb. 28 is seen as a key ingredient.

 

Market technicians said it will take a close above this month's high of US$2.37 3/4 in May corn to provide the market with solid upside technical momentum. A close below last week's low of US$2.27 1/2 would provide futures with fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.35 1/4--Thursday's high--and then at US$2.37 3/4. First support is seen at US$2.32 and then at US$2.30--Thursday's low.

 

The U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 1,490,500 metric tonnes, 25% above the previous week, but 6% below the prior four-week average. Major buyers include Japan, in for 321,700 tonnes, and Taiwan, buying 301,600 tonnes. 2006-07 marketing year sales were 72,000 metric tonnes, all to the Dominican Republic. Trader expectations ranged from 900,000 to 1,200,000 tonnes.

 

In news, China could suspend corn shipments from March, if the government doesn't extend an export quota expiring Feb. 28, local traders said Friday. Corn exports, except for those already contracted, will be suspended if the government doesn't announce an extension or new quotas by Tuesday, officials said. China's corn exports are bound by government-set quotas.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said rain overnight in Argentina expanded to include the area of north-central Buenos Aires that missed the activity during the night before. This means that coverage with this event has reached the levels we were expecting 2 days ago, Meteorlogix said. Rain totals of 0.50-1.50 inches and locally heavier is estimated to have covered 80 to 90 percent of the corn, soybean and sunflower areas during the past 48 hours.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mixed, with the benchmark September 2006 contract rising RMB1 to settle at RMB1,482/tonne, after trading in a narrow range.