April 19, 2007

 

CBOT Corn Outlook on Thursday: Up 2-4 cents on follow-through spread trade

 

 

Chicago Board of Trade corn futures are expected to begin day session activity 2-to-4 cents higher Thursday following the gains established in overnight trade with follow through bear market spread unwinding from Wednesday expected to support prices at the opening, a commission house analyst said.

 

In overnight electronic trading, May corn gained 5 cents to US$3.68 1/2 cents per bushel, July rose 4 1/2 cents to US$3.79 3/4 and December slipped 1/2 cent to US$3.81. E-CBOT volume in July was 18,192 contracts.

 

The corn market saw further bear market spread unwinding overnight and the nearby months should remain supported by additional unwinding Thursday, a floor analyst said.

 

In Wednesday's activity the July-December corn spread narrowed 8 cents to 6 1/4 cents premium December and in overnight spread the narrowed further with the December holding a 1 1/4 cent premium to July.

 

In addition, ideas that farmers would be able to begin fieldwork and planting in the next several days in parts of the U.S. Midwest has eased some concerns that not as many corn acres would be planted due to adverse weather conditions this spring, also weighed on the new crop contracts, the analyst added.

 

Some market support could also be generated from a longer term forecast calling for wetter than normal weather, a floor trader said. Little support is seen from the weekly export sales report released this morning, the trader added.

 

The U.S. Department of Agriculture reported weekly U.S. corn export sales were 865,800 metric tonnes for the week ended April 12, slightly above the 600,000-800,000 tonnes expected by analysts. Included in the total were sales of 62,500 tonnes for delivery in the 2007-08 crop year.

 

In the western U.S. Midwest, dry conditions with only a few light showers in northwest sections of the region are possible Friday with any thundershower activity on Saturday confined to far western areas, DTN Meteorologix Weather said. Temperatures are expected to average above normal Friday and above or well above normal Saturday.

 

In the eastern sections of the region dry weather is expected through Saturday with temperatures near-to-above normal Friday and above normal Saturday.

 

In the 6-to-10 day weather outlook, Meteorologix Weather forecasts precipitation near-to-above normal south and east and near-to-below normal northwest, while temperatures are expected to average below normal.

 

On daily technical charts, July corn closed near the session high Wednesday with choppy trading expected in the near term, a technical analyst said.

 

First support is seen at US$3.70 and then at US$3.65. First resistance is pegged at US$3.78 and then at US$3.82.

 

In other corn news, Argentina increased its 2006-07 corn production estimate to 22 million metric tonnes, up from 21.6 million the previous month, the Agricultural Secretariat said in its monthly crop report Wednesday.

 

To date, producers have combined 27% of area planted to corn, the Secretariat said.

 

Corn futures on China's Dalian Futures Exchange settled slightly higher with the September contract up RMB/3 at RMB1,643/tonne.