March 6, 2008

 

CBOT Corn Outlook on Thursday: Up 3-5 cents on overnight gains, China news

 

 

Chicago Board of Trade corn futures are expected to begin trading 3 to 5 cents higher, underpinned by overnight strength and news that China would delay issuing export quotas for corn.

 

In overnight electronic trading, May corn gained 4 1/2 cents to US$5.71 1/2 per bushel and December rose 3 3/4 cents to US$5.81. Electronic trading volume in May was over 10,000 contracts.

 

The market should start out higher based on the firm prices in the overnight session, a commission house analyst said. News that China would wait until the harvest begins in September before issuing any new corn export quotas should also supply support, the commission house analyst said. China is normally a major exporter of corn to countries in Asia.

 

Price direction will also be impacted by what happens in the outside markets, a trader said. Crude oil supplied upside momentum for corn Wednesday and it was stronger in the overnight session, but has retreated well off of earlier levels, the trader said.

 

Weekly corn export sales were within the range of analyst estimates and aren't expected to have much influence on price direction, an analyst said. The U.S. Department of Agriculture reported corn export sales for the week ended Feb. 28 totaled 710,400 metric tonnes. Included in the total were sales of 62,300 tonnes for delivery in the 2008-09 crop year. A trader termed the sales as "okay."

 

On daily technical charts, July corn closed higher and hit another fresh contract high as very strong "outside" markets helped the bulls Wednesday, a technical analyst said. Corn bulls still have a solid technical advantage and their next upside price objective is to push and close prices above major psychological resistance at US$6.00. The next downside price objective is to close prices below solid support at this week's low of US$5.58 1/4.

 

First resistance for July corn is seen at US$5.86 and then at US$5.90. First support is seen at Friday's low of US$5.63 3/4 and then at US$5.58 1/4. First support is seen at US$5.76 and then at US$5.71.

 

Deliveries posted against the Chicago Board of Trade March corn future were 256 contracts Thursday. The house account of Tenco issued all 256 contracts. Stoppers included the customer account of JP Morgan which stopped 46 contracts and the house account of Tenco which stopped 209 contracts. The last trade assigned was Feb. 26.

 

In other corn news, the USDA announced the sale of 385,000 metric tonnes of corn to South Korea.

 

Corn futures on China's Dalian Commodity Exchange settled higher with the September contract up RMB16 at 1,868 RMB/tonne.