March 28, 2008

 

CBOT Corn Outlook on Friday: Down 4-6 cents; month-end, pre-report positioning

 

 

Corn futures on the Chicago Board of Trade are expected to open Friday's day session lower, extending the overnight theme on end of the month and pre-report position squaring.

 

Analysts expect corn to open 4 to 6 cents lower.

 

In overnight electronic trading, May corn was 6 cents lower at US$5.49 1/2, July corn was 5 1/4 cents lower at US$5.62, and December corn was 4 3/4 cents lower at US$5.63 3/4.

 

A quiet news front is seen keeping traders looking to even up a few positions ahead of the key plantings report on Monday, and with outside inflationary markets lower, downside movement is seen as the preferred choice in early action, analysts said.

 

The U.S. Department of Agriculture is scheduled to release its 2008 U.S. prospective planting report Monday at 8:30 a.m. EDT.

 

A firmer U.S. dollar will aid the lower tone as well as spillover pressure from neighboring grains and soybeans, traders said.

 

Otherwise, traders are expected to take cautious approach with month-end and pre-report positioning featured, analysts added.

 

Nevertheless, downside risks are expected to remain limited, with forecasts for a significant drop in corn planted acreage and lingering worries of early planting delays in the southern Midwest amid wet, cool conditions and flooding issues, traders added.

 

In demand news, USDA announced Friday private export sales of 397,000 metric tonnes of U.S. corn for delivery to unknown destinations. Of that total, 287,000 tonnes are for delivery in the 2007-08 marketing year and 110,000 tonnes are for delivery in the 2008-09 marketing year.

 

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 Delta region should see only light scattered showers through the daytime hours of Monday. Heavier showers develop Monday night into Tuesday.

 

A technical analyst said 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 is to push and close prices below solid technical support at US$5.50.

 

First resistance for July corn is seen at Thursday's high of US$5.69 1/2 and then at this week's high of US$5.73. First support is seen at Thursday's low of US$5.60 and then at US$5.58.

 

In other news, Goldman Sachs forecast Friday that U.S. corn acreage will fall 10.2% in 2008 to 84.1 million acres, much lower than the average industry estimate. A Dow Jones Newswires survey of 22 analysts saw a range of forecasts between 85.7 million and 89.8 million acres, putting the average at 87.387 million. These are all down from the 2007 record corn seedings of 93.6 million acres.

 

In overseas markets, South African white corn prices ended little changed Friday as traders refrained from making any large moves ahead of the U.S. planting plans on Monday. The most active white corn for July delivery ended 9 rand lower at ZAR1,814 a metric tonne and May white corn was down ZAR23 at ZAR1,847 per tonne.