September 20, 2007

 

CBOT Corn Outlook on Thursday: 4-6 cents higher on technical buying, spillover

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 4 to 6 cents higher Thursday, as follow through buying from stronger prices in overnight trading and continued technical buying from Wednesday's close is expected to support prices, analysts said

 

In overnight electronic trading, December corn gained 5 3/4 cents to US$3.64 per bushel and March rose 5 1/4 cents to US$3.80. e-CBOT volume in December was 8,050 contracts.

 

The market rallied into the close Wednesday on technical buying with December closing at a three-week high and that is expected to continue Thursday, an analyst said. Spillover from stronger prices in overnight trade should also provide support, the analyst said.

 

Corn could also derive some strength from higher commodity prices in general, a commission house analyst said. Crude oil, gold and silver prices are up and people are beginning to talk about inflation, he said.

 

U.S. weekly corn export sales were well above analyst expectations and should also provide support for corn prices, the commission house analyst said.

 

The U.S. Department of Agriculture reported weekly corn export sales were 2.032 million metric tonnes for the week ended Sept. 13, well above the 850,000-1.350 million metric tonnes expected by analysts.

 

"Sales were big and should also help supply support to the market," the commission house analyst said.

 

News that China will no longer approve applications for new corn industrial processing plants and requested that traders cut exports was viewed as supportive. A floor trader however, noted that China has been largely absent from the export markets this year and the move should have little impact. In addition there are some concerns about the size of China's 2007-08 corn crop, the trader said. The USDA estimated China's corn crop at 147 million metric tonnes last week and there are ideas that the crop could be lower, the trader said.

 

On daily technical charts, December corn closed at a fresh three-week high close on short covering and fresh fund buying, a technical analyst said. Bulls have gained some fresh upside technical momentum Wednesday but follow-through buying on Thursday would give the bulls much better upside technical momentum, the analyst said. The next upside objective is to close prices above solid resistance at Wednesday's high of US$3.58 3/4, with the next downside price objective closing prices below solid support at US$3.45 per bushel.

 

First resistance for December corn is seen at US$3.58 3/4 and then at US$3.60. First support pegged at US$3.54 and then the reaction low crossing of US$3.50.

 

In other corn news, the Korea Corn Processors Association, purchased 46,000 metric tins of optional-origin corn from Archer Daniels Midland in a tender concluded Thursday, a trader in Seoul said.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the May contract down RMB5 at RMB1,656 per metric tonne.