March 1, 2006

 

CBOT Corn Outlook on Friday: Seen flat down 1 cent; in tune with e-CBOT

  

 

Corn futures on the Chicago Board of Trade are seen starting Friday's session slightly lower, in tune with overnight action, as the market seeks direction amid a quiet news front.

 

Analysts expect corn to open flat to 1 cent per bushel lower.

 

In overnight electronic trading, March corn was 3/4 cent lower at US$2.27 3/4, and May corn was 1/2 cent lower at US$2.38 3/4 per bushel.

 

The market continues to battle the forces of bullish chart formations and bearish supply side fundamentals, but with the potential for fund buying to emerge on any price break, traders are cautious of pressing prices, analysts said.

 

Commodity fund activity remains the dominant force in the market, and any signs that early weakness fails to attract follow through momentum is expected to uncover buying interest, traders added.

 

The allure of satisfying near term upside price objections continues to keep futures leaning toward technical factors, with analysts saying Thursday's gains had no fundamental connection. Outside inflationary markets are holding modest gains in early Friday, with metals and crude oil futures all trading higher.

 

Technical analysts said May futures closed near the session high Wednesday and scored a bullish outside day up on the daily bar chart. A weekly high close on Friday would give the market bulls better upside technical momentum and suggest a challenge of resistance at US$2.50 a bushel. Bulls still have technical momentum, but a close below last week's low of US$2.30 would provide the bears with some fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.39 3/4--Thursday's high--and then at US$2.41. First support is seen at US$2.38 and then at US$2.37.

 

Meanwhile, the recirculation of heavy deliveries continues to project bearish supply side fundamentals and with fears of bird flu cutting into global feed demand, upside movement may be limited without any strong support from commodity fund buying.

 

In deliveries, a total of 1,351 delivery notices recirculated against the March future. Issuers were scattered among various commission houses. The principle stoppers were customer accounts at ABN Amro with 557 lots and a customer account at UBS Securities with 362 lots. The last date assigned was February 27.

 

Cash corn basis bids were mostly unchanged to lower across the Midwest.

 

DTN Meteorlogix Weather Service said a secondary cold front has developed and will move through Argentina today. This extends the chance for showers through today before drier and cooler weather develops during the weekend. Meanwhile, widespread rain and thunderstorms are expected in South Africa during the weekend and Monday. This rainfall may mean flooding for some crop areas. Maize crops would benefit from warmer and drier Weather, Meteorlogix added.

 

In overseas markets, corn futures China's Dalian Commodity Exchange settled higher on speculative long buying amid the spillover effect from other agricultural commodities, analysts said. The benchmark September 2006 contract settled RMB17 higher at RMB1,474/tonne.