August 31, 2006

 

CBOT Corn Outlook on Thursday: 1/2-1 cent higher on follow through

 

 

Corn futures are forecast to start day session trading 1/2 to 1 cent higher Thursday, following Wednesday's rally and a firm tone in overnight trading, sources said.

 

In overnight e-CBOT trading, September corn rose 3/4 cent to US$2.29 1/4 per bushel and December gained 1 cent to US$2.45 3/4 with e-CBOT volume in December 8,537 contracts.

 

Export sales for corn were good and the market could see some support from the sales early, a commission house analyst said. However, a lot depends on what happens in wheat and what the funds want to do. The market was oversold and due for a correction, now corn will see how much follow through there is, he added.

 

On Wednesday, spillover buying from wheat futures and late fund buying helped push corn to three-week highs.

 

The U.S. Department of Agriculture reported that corn weekly export sales totaled a combined 1,681.2 million metric tonnes for the week ended Aug. 24. Included in this total were sales of 2.028 million tonnes for delivery in 2006-07, while old crop (2005-06) sales were reduced by 346,800 tonnes.

 

On technical charts, December corn bulls gained fresh upside technical momentum Wednesday as prices hit a three week high, a market technician said. The next upside price objective for the bulls is closing prices above solid technical resistance at US$2.50. First resistance for December corn is seen at US$2.47 1/2 and then at US$2.50. First support is pegged at US$2.42 and then at US$2.40.

 

Deliveries were heavy but that's to be expected ahead of the long weekend, a floor source said

 

Deliveries posted against the September totaled 2,714 contracts. Large issuers included the customer account of JP Morgan, which issued 597 contracts, the customer account of Tenco, which issued 500 contracts and the customer account of Bank of America, which issued 584 contracts.

 

Large stoppers included the customer account of Man Financial, which stopped 757 contracts and the customer account of Calyon Financial, which stopped 350 contracts. Corn basis bids were mixed Thursday. Central Illinois was unchanged at 4 cents over the September future.

 

In other corn news, drought conditions in several regions of China will probably cause a loss of over 1.5 million metric tonnes of corn production this year, the China Feed Industry Association said on its web site Thursday.

 

Corn futures on China's Dalian Commodities exchange ended mostly lower with May 2007 unchanged at RMB/1,394 per tonne.