April 7, 2006

 

CBOT Corn Outlook on Friday: Down 1 cent on e-CBOT, ahead of USDA report

 

 

Corn futures at the Chicago Board of Trade are forecast to begin trading 1 cent lower Friday after weaker prices in overnight trading and ahead of Monday's U.S. Department of Agriculture U.S. supply and demand report, sources said.

 

The average of fifteen analysts' estimates of 2005-06 U.S. corn-ending stocks is 2.259 billion bushels, below the 2.351 billion estimated by the USDA in March but above 2004-05 ending stocks of 2.114 billion bushels.

 

In overnight e-CBOT trading, May corn fell 1 1/2 cents to $2.40, and July declined 1 1/4 cents to $2.51 1/2.

 

Corn should start out weaker based off of the overnight prices and some profit-taking after Thursday's gains, a commission house analyst said. However, market direction will be determined by the funds and what they want to do after their buying Thursday.

 

Fund buying in corn, some thought to be index funds, was estimated at 21,000 contracts and helped set a new open interest record based on preliminary open interest figures.

 

The market is currently not trading fundamentals, with the direction determined by the funds, a floor trader said. The market could trade both sides of Thursday's settlements with trading cautious and some people on the sidelines ahead of the weekend and before the USDA report, he added.

 

Mainly dry conditions are forecast in the U.S. western Midwest corn growing region over the weekend and extending into Monday, said DTN Meteorlogix Weather. Temperatures will average below normal Saturday and near to above normal Sunday.

 

In the eastern U.S. Midwest, rain and possible thundershowers are forecast Friday into Saturday, with the heaviest amounts, .25-1.00 inch, expected in the northern and eastern areas of the region, DTN Meteorlogix Weather said. Mainly dry conditions are forecast for later Saturday and Sunday. Temperatures will average mostly below normal during the weekend, DTN Meteorlogix noted.

 

On technical charts, May corn closed at a fresh seven-month high close on Thursday and the bulls gained fresh technical power, a market technician said. Last week's high of $2.43 is still strong overhead resistance but if May corn can close above it that would suggest another solid run in prices, he said. First resistance is seen at Thursday's high of $2.41 3/4 and then at $2.43. First support is pegged at $2.40 and then at $2.37 1/2, Thursday's low.

 

Corn basis bids were unchanged to mostly lower Friday morning. Central Illinois was unchanged against the May future.

 

In other corn news, corn futures on China's Dalian futures exchange settled mixed, pressured by soy futures, market analysts in China said. The September contract settled RMB4 lower at RMB1,401/tonne.

 

Friday afternoon the Commodity Futures Trading Commission is scheduled to release the commitment of traders report as of April 4.

 

Monday morning the USDA is scheduled to release the April U.S. supply and demand report at 7:30 a.m. CDT (1230 GMT) and is scheduled to release the weekly export inspections report at 10:00 a.m. CDT (1500 GMT).