March 6, 2009

Chicago Board of Trade corn futures are expected to open 1 cent to 2 cents higher Friday, following overnight gains in agricultural commodities and crude oil futures.

 

In overnight electronic trading, CBOT March corn added 2 3/4 cents to US$3.52 a bushel; May corn rose 1 cent to US$3.59 1/2 and July corn gained 1 1/4 cents to US$3.69.

 

With equities markets about flat with the release of unemployment numbers that were generally in line with expectations, agricultural commodities will likely benefit from stronger crude oil futures and a weaker U.S. dollar, a CBOT floor trader said.

 

Despite a drop in corn futures Thursday, "the positive for the day was that corn as well as beans and wheat were able to hold above yesterday's lows and that should give us a shot at a two sided trading affair on Friday," said analyst Jon Michalscheck in a Benson Quinn Commodities market commentary.

 

"We would expect that the market could be somewhat hesitant to press the short side of the complex that was put in on Monday of this week ahead of next Wednesday's USDA month supply and demand report," Michalscheck said.

 

The U.S. Department of Agriculture's supply and demand report is due for release at 7:30 a.m. EDT March 11.

 

The report will "not likely" be bullish, "but the report, along with the crop year's first prospective planting report to be released on March 31, may keep the bears from extending their short position too excessively ahead of the planting season," Michalscheck said.

 

March corn deliveries totaled 1,009 lots. A customer account at Man Professional Clearing was the primary issuer and stopper at 629 lots and 261 lots, respectively.

 

Technical indicators still favor the bears, a market technician said, noting a two-month-old downtrend remains in place on the daily bar chart.

 

The bears are pushing to close May corn below solid technical support at this week's low of US$3.44 1/2 a bushel, he said, placing first support at Thursday's low of US$3.55 1/2 and then at US$3.50.

 

The bulls are aiming to at last week's high of US$3.80 1/2, he said, pegging first resistance at this week's high of US$3.65 and then at US$3.70.

 

The last trade date was assigned March 5.

 

Although Argentine farm leaders reached a tension-easing deal with the government Tuesday, the rank and file in the fields are still angry.

 

That means that a return to last year's bruising conflict remains a real possibility. Despite progress in negotiations with the government, farmers continue to complain about restrictions and taxes on exports as well as the widespread damage suffered due to drought this season.

 

The conflict provides some support for U.S. grain and soy markets, analysts and traders say. Still, export competition continues. San Miguel Corp.(SMCB.PH) has signed a contract to buy 40,000 tonnes of Argentine corn for arrival between March and April, a grains trading official familiar with the deal said Friday.

 

The country exported about 3 million tonnes of corn in the crop year ended September 2008. About 150,000 tonnes was exported from October 2007 to January 2008.

 

In other global trade news, Indian corn exports could revive after a slump in demand during October-January as a weakening rupee against the dollar would make the nation's grain cheaper in overseas markets, a senior industry official said Friday.

 

"It could change the dynamics of exports," Amit Sachdev, India representative of the U.S. Grains Council, told Dow Jones Newswires. "Exports could rise because of this."