September 22, 2006

 

CBOT Corn Outlook on Friday: 1/2-1 Cent lower; following overnight tone

  

 

CBOT corn futures are expected to begin the day session trading 1/2 to 1 cent lower Friday as weakness in the overnight session and position squaring ahead of the weekend and after Thursday's strong gains are expected to weigh on prices, sources said.

 

In overnight e-CBOT trading, December corn ended 1 1/4 cents lower at US$2.56 per bushel and March slipped 1/4 cent to US$2.69 3/4. e-CBOT volume overnight in December was 4,636 contracts.

 

It is Friday, and the market could see people take some profits, a commission house analyst said. However, the funds usually buy in 3-day cycles and it is the third day so corn could see some additional buying interest, he added.

 

There wasn't much news out overnight to extend Thursday's rally, a floor source said. Corn was a little overdone on the upside as heavy fund buying provided the boost for the gains and unless the funds are buyers again the market could see some weakness. Concerns over the potential for harvest delays due to the rain in the U.S. Midwest could limit the weakness, he noted.

 

In the western U.S. Midwest, scattered showers and rain are forecast for the next 48 hours with amounts of .25-1.00 inch expected. Dry conditions follow from the period from Sunday through Tuesday, DTN Meteorologix Weather said. Temperatures are expected near-to-below normal through Sunday.

 

In the eastern U.S. Midwest, showers and thunderstorms are expected with amounts of 0.50-2.00 inches. Dry conditions return Monday and Tuesday, Meteorologix said.

 

On technical charts, December corn bulls have fresh upside near-term technical momentum to strongly suggest harvest lows are in place, a technical analyst said. However, odds are still not high for a strong uptrend to develop heading into the teeth of the U.S. corn harvest, he said.

 

The next upside price objective is closing prices above solid resistance at US$2.60 in December. First resistance is seen at US$2.57 1/2, Thursday's high and then at US$2.60. First support is pegged at US$2.55, and then at US$2.52.

 

In other corn news, private analytical form Informa Economics sees 2007 U.S. corn planted acreage at 83.1 million up 3.7 million from 2006.

 

China's Jilin province auctioned 378,000 metric tonnes of old crop corn to ethanol and feed producers Thursday, sources said.

 

The provincial government had planned to auction 500,000 tonnes of corn from its stocks, according to a statement on the Jilins Grains Center's web site.

 

Corn futures on China's Dalian Commodity Exchange finished slightly higher with the May contract up RMB/4 at RMB1,403/tonne.