September 27, 2007

 

CBOT Corn Outlook on Thursday: 4-6 cents higher on follow through, wheat rally

 

 

Chicago Board of Trade corn futures are predicted to begin trading 4 to 6 cents higher Thursday on follow through buying from gains set in the overnight session as well as spillover buying from wheat, analysts said.

 

In overnight electronic trading, December corn gained 6 cents to US$3.81 per bushel and March rose 5 3/4 cents to US$3.96 1/2. e-CBOT volume in December was 6,728 contracts.

 

Corn was higher overnight on follow through and technical buying from Wednesday's strong close and should open higher based off of those factors, an analyst said. Wheat is expected to open sharply higher after rallying to limit up Wednesday and that should also underpin corn prices, the analyst said.

 

In overnight trade December wheat jumped 18 cents to US$9.35 1/4 per bushel.

 

Stronger-than-expected weekly export sales might also provide support for corn, a floor trader said.

 

The U.S. Department of Agriculture reported corn export sales totaled 1.7 million metric tonnes for the week ended Sep. 20, above the 600,000 to 1.4 million tonnes expected by analysts.

 

Demand for corn continues to be strong and that will act as support. In addition, metals and energy prices are stronger, so corn should benefit as commodities in general are higher, the trader said.

 

There is a quarterly stocks report scheduled for release on Friday and it is the end of the month and the quarter, so the corn market might see some positioning squaring ahead of report, a commission house analyst said.

 

The average quarterly stocks estimate for the fourth quarter of the 2006-07 crop year was 1.147 billion bushels, according to a survey of 12 analysts, compared to the 1.142 billion bushel carry over estimated by the U.S. Department of Agriculture in the Sept. 12, supply and demand report.

 

The Quarterly stocks report is scheduled for release Friday at 8:30 a.m. EDT (1230 GMT).

 

On daily technical charts, December corn closed near the session high and traded a bullish "outside day" up on the daily bar charts Wednesday, a market technician said. The bulls have upside technical momentum and a bull flag or pennant pattern has formed on the daily bar chart, the technician said. Corn bulls' next upside objective continues to be to closing prices above solid resistance at US$3.80 per bushel. The bears' next downside objective is closing prices below solid support at US$3.65 per bushel.

 

First resistance for December corn is seen at US$3.76, and then at US$3.80. First support is seen at US$3.70 3/4 and then at US$3.66.

 

In other corn news, feed mills in Asia are increasingly switching to corn as feed wheat becomes too expensive, industry participants said Thursday.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the May contract up RMB15 at RMB1,660 per metric tonne.