July 5, 2007

 

CBOT Corn Outlook on Thursday: Up 4-6 cents on higher e-CBOT, soy, wheat

 

 

Chicago Board of Trade corn futures are expected to start day time trading 4-to-6 cents higher Thursday as spillover from stronger prices overnight, ideas recent losses were overdone and due for a correction and firm soybean and wheat values are expected to underpin prices at the opening, analysts said.

 

In overnight electronic trading, July corn gained 3 cents to US$3.23 per bushel, September rose 5 3/4 cents to US$3.34 1/4 and December also gained 5 3/4 cents to US$3.43 3/4. E-CBOT volume in December was 11,057 contracts.

 

Corn is oversold and overdue for a correction, a commission house analyst said. The market was higher overnight and wheat and soybeans were stronger and will likely add some support, the analyst added.

 

Parts of the western U.S. Midwest are dry and the forecast Thursday morning in those areas is drier than the forecast was Tuesday, an analyst said. Corn should start out to the upside, but whether it ends higher depends upon the midday weather updates, he said.

 

With some participants expected to be absent extending their midweek holiday, activity could move in one direction without much opposition, a trader said.

 

In the western U.S. Midwest, mainly dry weather is forecast through Saturday, DTN Meteorologix Weather said. Temperatures are expected to average near- to above-normal Thursday and Friday and above normal Saturday, with highs Saturday in the low to middle 90 degrees Fahrenheit.

 

In the eastern U.S. Midwest, mainly dry weather is expected Friday and Saturday with temperatures averaging near-normal Friday and near to above normal Saturday.

 

In the 6- to 10-day outlook, temperatures are expected to average near-to-below normal and rainfall is predicted near- to above-normal south and east and near-to-below normal northwest.

 

On daily technical charts, December corn closed sharply lower and hit a fresh eight-month low on long liquidation pressure. The near-term technical damage suggests a market top is in place but the market is way oversold on a short-term technical basis and is due for a short-covering bounce soon, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.50 per bushel, with the bears' next downside price objective closing prices below solid support at US$3.25 per bushel.

 

First resistance is seen at US$3.40, and then at US$3.47, Tuesday's high. First support is pegged at US$3.36, Tuesday's low and then at US$3.30.

 

Deliveries posted against the Chicago Board of Trade July corn future were 1,369 contracts Thursday. Large issuers included the customer account of UBS Securities which issued 1,130 contracts and the customer account of RJ O'Brien, which issued 180 contracts. Large stoppers included the customer account of Man Financial, which stopped 735 contracts and the customer account of RJ O'Brien, which stopped 185. The last trade assigned was July 2.

 

In other corn news, China is likely to export five million metric tonnes of corn in 2006-07 marketing year, up 32% from a year earlier, an official with the country's National Grains and Oil Information Center, a government think-tank, said Wednesday.

 

China is planning to issue regulations later this month designed to limit the use of corn in industrial applications, including ethanol, an official with the country's National Development and Reform Commission said Thursday.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB13 at RMB1,539 per metric tonne.