March 27, 2008

 

CBOT Corn Outlook on Thursday: Up 1-3 cents, fundamentals underpin

 

 

Corn futures on the Chicago Board of Trade are expected to start Thursday's day session higher, continuing its ascent from last week's losses on supportive underlying fundamental influences.

 

Analysts expect corn to open 1 to 3 cents higher.

 

In overnight electronic trading, May corn was 2 1/4 cents higher at US$5.54 1/2, July corn was 1 1/4 cents higher at US$5.66 1/4, and December corn was 1 3/4 cents higher at US$5.70 1/4.

 

Strong underlying demand, prospects for early planting delays in the southern Midwest amid cool wet conditions, and outlooks for a major reduction in U.S. corn planted acreage in 2008 serve as underpinning features, analysts said.

 

Trade positioning is expected to be a focus moving forward, as participants look ahead to Friday's hogs and pigs report and Monday's planting and stocks reports for clues to demand and potential acreage, analysts added.

 

In addition, light speculative liquidation may also stem from higher margins on CBOT corn that took affect Thursday. Corn initial margins were raised to US$2,025, up from US$1,350 a contract.

 

Otherwise, weather will be watched closely for near term direction, as the prospects for early plantings diminish daily with precipitation expected for much of the growing area during the next 10-days, an analyst said in a morning market report.

 

The DTN Meteorlogix Weather Service forecast said the wet weather pattern looks to continue over the eastern and southern Midwest, increasing concerns about spring field work delays. The northern Delta region should see some rain during Friday. The southern areas may not be very wet until Monday night or Tuesday.

 

Meanwhile, weekly export sales were deemed respectable, falling with the range of pre-report estimates, traders said.

 

A technical analyst said recent chart damage has now been repaired in corn, and market bulls have regained fresh upside technical momentum.

 

The next upside price objective for July corn is to push and close prices above solid technical resistance at US$5.80. The next downside price objective for is to push and close prices below solid technical support at US$5.50. First resistance for July corn is seen at Wednesday's high of US$5.73 and then at US$5.80. First support is seen at Wednesday's low of US$5.58 and then at US$5.50.

 

U.S. Department of Agriculture reported total weekly corn export sales were 730,300 metric tonnes for the week ended March 20. 2007-08 marketing year sales totaled 632,500 tonnes. The sales were primarily for Japan with 174,700 metric tonnes, and Colombia with 155,500 tonnes. Analysts had forecast sales between 600,000 and 900,000 metric tonnes.

 

South African white corn prices were lower at midday Thursday, unmoved by Wednesday's gains on CBOT, as traders cut their risk exposure ahead of an expected bearish crop output forecast Thursday afternoon, market participants told Dow Jones Newswires. The most active white corn for July delivery was trading 28 rand lower at ZAR1,820 a metric tonne.