March 31, 2006

 

CBOT Corn Outlook on Friday: Up 5-7 cents; lower-than-expected seeding data

 

 

Corn futures on the Chicago Board of Trade are seen starting Friday's session on firm footing, as smaller-than-expected planting intention projections provide early direction for prices.

 

Analysts expect corn to open 5 cents to 7 cents higher.

 

The plantings number will serve as the catalyst for upside movement in a market starving for fundamental support amid a steady appetite of speculative buying that continues to build open interest in the market, said a CBOT commission house broker.

 

New crop months will move into focus as an in line with expectation quarterly stocks figure does little to alter 2005-06 marketing year balance sheet projections. The acreage number if realized is seen placing increased pressure to produce strong yields this summer to keep up with solid underlying demand despite healthy projected carryover forecasts from the 2005-06 marketing year.

 

U.S. Department of Agriculture projected 2005 U.S. corn plantings at 78.019 million acres, below the average trade estimate of 80.576 million. This figure is well below the 2005 season, when 81.759 million acres were seeded.

 

USDA said the corn plantings if realized would be the lowest U.S. corn acreage since 2001, citing farmer intentions to plant less intensive crops due to fertilizer and fuel costs.

 

Old crop months may garner pressure from further confirmation of large supplies. USDA pegged March 1 corn stocks at a hefty 6.987 billion bushels, which matched the average analyst estimate. This is also well above the same time last year, when stocks totaled 6.756 billion.

 

However, traders warned that Friday's trade would still be about what funds want to do at the end of the month, but with speculative traders looking for an opportunity to push prices, upside momentum should be in force.

 

Technical analysts say market bulls regained some technical momentum Thursday. A four-week-old downtrend on the daily bar chart was negated and so was a bearish pennant pattern on the daily chart.

 

First resistance for May corn is seen at $2.28--Thursday's high-and then at $2.30. First support is seen at $2.25 1/4--Thursday's low--and then at $2.22 1/2. U.S. Midwest cash corn basis bids were mostly steady to lower Friday, cash traders said. Spot U.S. cash corn bids were down 4 cents in Peoria Ill, down 1 cent in Fort Dodge IA, and down 1 cent in St Louis, MO.

 

DTN Meteorlogix Weather Service said in the western Midwest light rain and windy conditions are expected in northern areas Friday. Dry conditions are on tap for the region early Saturday, before rain and thunderstorms redevelop late Saturday and continue into Sunday. An additional 0.30-1.50 inches of precipitation is expected. Temperatures in the western belt average near to below normal today, near to above normal Saturday, and near to below normal Sunday.

 

The eastern Midwest will experience scattered showers of 0.25-1.00 inch Friday, mainly affecting the eastern and southern Midwest and the eastern Delta. Dry conditions are in store for Saturday, before a chance for scattered showers emerge Sunday, especially through the eastern Midwest portion. Temperatures will average above normal in the Delta through the weekend. The Midwest may turn cooler Friday and early Saturday but it should be warmer again later Saturday and during Sunday.

 

In demand news, the Taiwan Sugar Corp., or TSC, bought 23,000 metric tonnes of U.S.-origin corn and 12,000 tonnes of U.S.-origin soybeans for May delivery from trading house Mitsui in a tender concluded on Friday, traders said.

 

In overseas markets, Corn futures on China's Dalian Commodity Exchange settled higher. The most widely held September 2006 contract settled RMB7 higher at RMB1,406/tonne.