March 7, 2008

 

CBOT Corn Outlook on Friday: Down 10-12 cents on soy market retreat

 

 

Chicago Board of Trade corn futures are predicted to start trading 10 to 12 cents lower Friday, pressured by sharply lower soy complex values and overnight weakness, an analyst said.

 

In overnight electronic trading, May corn declined 11 1/2 cents to US$5.55 3/4 per bushel and December dropped 13 1/4 cents to US$5.66. Electronic trading volume in May was 7,673 contracts.

 

Corn is following the soy complex and it remained under pressure in overnight activity continuing its recent trend and as a result corn should start on out the defensive, the analyst said.

 

In overnight trading, May soybeans fell 44 1/2 cents to US$14.14 1/4 per bushel and May soyoil ended the session 200 points lower, limit down at 63.33 cents per pound.

 

Lower commodity prices overseas are also expected to act as a drag on corn prices, a commission house analyst said. Market chatter that China would begin selling vegetable oil from state reserves helped drive down futures prices in most commodities in Asia, the commission house analyst added.

 

Corn could see some support from any strength in outside inflationary markets, a trader said. Although crude oil is weaker, gold is higher and the dollar is lower which could provide some support. However, U.S. economic reports show that the economy is weakening and corn could see speculative traders taking profits after the market has rallied to new all-time highs, the trader said.

 

On daily technical charts, July corn closed steady Thursday as outside markets were mixed, limiting buying interest, a technical analyst said. Market bulls still have the solid near-term technical advantage and their next upside price objective remains closing 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 US$5.76 and then at US$5.71.

 

Deliveries posted against the Chicago Board of Trade March corn future were 221 contracts Friday. Large issuers included the house account of Tenco which issued 209 contracts. Stoppers included the customer account of JP Morgan which stopped 220 contracts. The last trade assigned was Feb. 26.

 

In other corn news, corn futures on China's Dalian Commodity Exchange settled lower with the September contract down RMB/24 at 1,844 RMB/tonne.