March 25, 2010

 

CBOT Corn Outlook on Thursday: Flat open; underlying technical support

 

 

Chicago Board of Trade corn futures are expected to open flat Thursday morning, while bulls are hoping for follow-through buying after Wednesday gains.

 

In overnight trade, May corn was flat at US$3.65 per bushel and July corn was up 1/4 cent to US$3.76 1/4.

 

The market traded in a tight range with low volume trade overnight. The market has underlying technical support, which held on Wednesday, as prices dipped below US$3.60 in the May contract but held firm at last month's low of US$3.59. Prices then rebounded into the close.

 

"Owning corn at that level makes fiscal sense for many of the commercial corn users," Country Hedging said in a commentary.

 

Fundamentally there is scant news, as traders are mostly keyed in on planting intentions and quarterly grain stocks reports due to be released next Wednesday. With planting season approaching, traders are also keeping an eye on weather forecasts, with warmer and relatively dry weather expected next week, which would be good for farmers and bearish for prices.

 

Export sales were within trade expectations Thursday. The U.S. Department of Agriculture reported weekly net sales of 606,800 metric tonnes, down from the prior week's total of 747,600. Analyst guesses had ranged from 350,000 to 800,000.

 

Technically, the next downside price objective for the bears is to push and close prices below solid technical support at Wednesday's and the February low of US$3.59, a technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at last week's high of US$3.76 1/2 a bushel.

 

First resistance for May corn is seen at Wednesday's high of US$3.66 1/2 and then at US$3.70, the technical analyst said. First support is seen at US$3.61 1/2 and then at US$3.59.

 

Analysts and traders say a dip below US$3.59 would trigger technical selling.

 

In other news, Japanese compound feed manufacturers are seeking at least 350,000 metric tonnes of corn from South America for July-September shipment, but have delayed purchases due to high ocean freight costs, trading executives said Thursday.

 

Japan, the world's largest corn importer, is likely to purchase around 3.5 million tonnes of feed grade corn for July/August/September shipment, mostly from the U.S., but is also keen to snap up cargoes from South America due to the significant jump in output in the region.

 

Buyers are eager to make purchases around US$225/tonne, cost and freight, but offers are currently close to US$239-US$241/tonne, a Tokyo-based importer said.