March 8, 2007

 

CBOT Corn Outlook on Thursday: Up 1-2 cents; e-CBOT, solid export sales

 

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's day session higher, in line with overnight advances, with solid weekly export sales and firm outside markets lending support.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1/4 cent higher at US$4.16, May corn finished 3/4 cent higher at US$4.25 1/4, and December corn was 1 3/4 cent higher at US$4.11.

 

A quiet news front and the absence of fresh supportive features are expected to keep the trade watching outside influences, as the market looks for near-term technical support, analysts said.

 

Robust weekly export sales should lend support to prices, as the sales figures illustrate good, solid demand and a lack of demand rationing at current price levels, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

The U.S. Department of Agriculture said net weekly export sales for corn were 1,258,700 metric tonnes. 2006-07 sales totaled 1,188,300 tonnes. The sales were 3 3/4 times higher than the previous week and 39% above the prior four-week average. Trade estimates called for commitments in the 700,000- to 900,000-tonne range. The biggest buyers were Mexico, buying 631,000 tonnes, and Japan, buying 258,700 tonnes.

 

Nevertheless, traders said corn futures remain a nervous market looking for fresh news, with prices consolidating after a recent break, bracing for plantings and stocks numbers at the end of the month. Meanwhile, light short covering is expected to aid the higher tone, as the market takes a cautious approach ahead of Friday's supply and demand report, despite assumptions the report will not reveal any market-moving data, a CBOT floor analyst said.

 

A technical analyst said market bulls are still somewhat on the defensive and need to work to fill a downside price gap on the daily bar chart that was created on Feb. 27. It will take a price move above US$4.38 basis May futures to fill that downside price gap and repair recent near-term chart damage. The next downside price objective is producing a close below solid chart support at this week's low of 4.13.

 

First resistance for May corn is seen at Wednesday's high of US$4.28 and then at US$4.30. First support is seen at Wednesday's low of US$4.19 and then at US$4.15.

 

USDA is scheduled to release its March supply and demand report Friday at 7:30 a.m. CST (1330 GMT). The average of estimates from a Dow Jones Newswires survey pegged corn 2006-07 ending stocks at 763 million bushels, up from February's estimate of 752 million. The estimates fell within range of 748 million to 802 million bushels.

 

In deliveries, a total of 363 notices were placed against the CBOT March corn future. The last trade date assigned was March 5. Issuers and stoppers were scattered among various commission houses.

 

In other news, the Philippines is set to buy 200,000 metric tonnes of duty- free corn to fill in a shortfall in local supply, Agriculture Secretary Arthur Yap said Thursday. Yap said the corn should arrive by July this year, which is an off-season for local harvests.

 

Meanwhile, Philippine feedmillers may not import any corn on their own this year, and will likely content themselves with the 400,000 tonnes of duty-free corn the government is expected to import, a senior industry official in Manila told Dow Jones on Thursday.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower, with the most-active September 2007 contract down RMB4 to settle at RMB1,697/tonne.