August 17, 2006

CBOT Corn Outlook on Thursday: Up 1-2 cents on overnight trade, solid exports

Corn futures are expected to begin day-session activity 1-to-2 cents higher Thursday, following a firm tone in overnight trading and good weekly export sales, sources said.

In overnight e-CBOT trading, September corn gained 2 1/4 cents to US$2.23 3/4 per bushel and December rose 2 cents to US$2.40. Volume in December on e-CBOT overnight was 3,539 contracts.

The market continues to consolidate after the recent declines but could see a better start based on the good export demand, said Sid Love of Kropf and Love Consulting in Overland Park, Kan. Recent basis levels are strong which could add additional support but speculative funds need to figure out what they plan to do with their positions, and the weather remains favorable for the crop, he added.

The U.S. Department of Agriculture reported that weekly corn export sales totaled 1,605.5 million metric tonnes for the week ended Aug. 10. Included in the total were sales of 575,400 tonnes for the 2005-06 marketing year and 1,030.1 million tonnes for delivery in 2006-07. This was above the total for both crop years expected by analysts.

Taiwan was the largest buyer for corn delivered in 2005-06, while Japan and Mexico were among the largest buyers in the 2006-07 marketing year.

The market should be supported by the export sales and ideas recent losses were overdone and due for a bounce, a commission house analyst said.

On technical charts, a bearish flag or pennant pattern could be forming on the daily bar chart for December corn, a market technician said. Serious chart damage has recently occurred and the bears are still in command, he added. First resistance is seen at US$2.42, Wednesday's high and then at US$2.45. First support is seen at US$2.37 3/4 and then at US$2.34 1/4, the contract low.

In other corn news, hot and dry weather in Ukraine's major corn producing regions has disrupted corn production with the Agriculture Ministry trimming production estimates to 6-6.5 million metric tonnes from 8 million tonnes earlier forecast.

Corn futures on China's Dalian Commodities exchange ended higher with May 2007 up RMB/5 at RMB/1,405/tonne.