August 31, 2007

 

CBOT Corn Outlook on Friday: 5-7 cents higher following overnight wheat rally

 

 

Chicago Board of Trade corn futures are predicted to begin trading 5-to-7 cents higher Friday, underpinned by the sharp gains in wheat futures to new all-time highs in overnight trade and spillover from higher prices in the E-CBOT session, analysts said.

 

In overnight electronic trading, September corn rose 7 1/2 cents to US$3.30 1/4 per bushel and December gained 5 1/2 cents to US$3.45 1/4. E-CBOT volume in December was 10,103 contracts.

 

"It's all about the wheat, and corn will open higher in sympathy with wheat," a commission house analyst said. In overnight trade December wheat traded to another all-time high and ended the session at US$8.05 1/4 per bushel, up 20 3/4 cents.

 

Corn is the laggard of the grains right now as early yield reports continue to be favorable with little fresh positive news to support the market, a floor analyst said. However, with wheat at historic highs as well as end-of-the-month position squaring, corn should be higher, the analyst said.

 

Warmer and drier weather remains likely during the next 5-to-6 days, helping conditions improve in the northern and western areas of the U.S. Midwest, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest dry weather is forecast Saturday with only a few light showers possible Sunday in northern sections of the region, with dry weather expected on Monday and Tuesday, Meteorlogix Weather said. Temperatures are expected to average above-normal in the period.

 

In the eastern U.S. Midwest mainly dry weather is forecast through the early part of next week with temperatures predicted to average near-to-above normal, Meteorlogix Weather said.

 

In the 6-to-10 day forecast, temperatures are expected to average near-to-above normal and rainfall is forecast to average near-to-above normal north and near-to-below normal south.

 

On daily technical charts, December corn closed near the session low and made a fresh two-week low Thursday and the bears still have downside technical momentum, a market technician said. Despite the move to all-time highs in wheat futures and the rally in soybeans, corn futures cannot make any headway to the upside and that is worrisome to market bulls, the technician said. The bulls' next upside price objective remains pushing prices above solid resistance above US$3.50 in December while the bears' next objective closing prices below solid support at US$3.36.

 

First resistance for December corn is seen at US$3.45 and then at US$3.48. First support is seen at Thursday's low of US$3.38 1/4 and then at US$3.36.

 

Deliveries posted against the CBOT September corn future were 438 contracts. Large issuers included the house account of ADM Investor Services which issued 283 contracts and the customer account of the Astro division of UBS Securities which issued 82 contracts. Large stoppers included the customer account of R.J. O'Brien, which stopped 128 contracts, and the customer account of MF Global, which stopped 69 contracts. The last trade assigned was July 2.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract up RMB/5 at RMB1,628 per metric tonne.