October 13, 2006

 

CBOT Corn Outlook on Friday: 1-2 cents higher on follow through, e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start Friday's day session 1 to 2 cents higher, as follow through buying from Thursday and higher prices in overnight activity are expected to support prices, floor sources said.

 

In overnight e-CBOT trading, December corn rose 2 1/2 cents to US$3.00 3/4 cents per bushel and March gained 2 1/4 cents to US$3.10 1/2. e-CBOT volume in December was 5,462 contracts.

 

Corn should be higher to start on follow through buying from Thursday as well as stronger prices overnight, a floor analyst said. Not many people are interested in selling ahead of the weekend, outside markets are higher and export sales were above expectations, he added.

 

The U.S. Department of Agriculture reported that weekly corn export sales totaled 1.29 million metric tonnes for the week ended Oct. 5, above analyst expectations of 800,000-1.0 million tonnes.

 

The major buyers were Japan at 779,800 metric tonnes and Mexico at 193,600 tonnes.

 

The market should start out firm on the overnight activity and the lack of selling interest after the reports, but corn could see some hedge related pressure in the session ahead of what is expected to be an active harvest weekend, said Shawn McCambridge, senior grain analyst with Prudential Financial. However, it looks like the downside in limited with people reluctant to sell, he added.

 

Technically the market looks like it wants to continue to go up and the funds were large buyers of corn Thursday and market direction could depend upon what the funds want to do Friday, a floor trader noted.

 

On technical charts, Thursday's new contract high of US$3.04 per bushel in December could be a near-term market top if corn experiences good selling pressure Friday, a market technician said. Corn has made a strong run recently and market bulls could be getting exhausted on the upside, he said. First resistance for December corn is seen at US$3.00 and then at US$3.04. First support is pegged at US$2.97 1/2 and then at US$2.95.

 

Cash corn basis bids were mixed Friday. Central Illinois was unchanged at 5 cents over the December.

 

In other corn news, Taiwan Sugar Corp., or TSC, has rejected all bids Friday for it's tender to purchase 35,000 metric tonnes of U.S. origin corn, a Taipei based trader said.

 

Corn futures at China's Dalian Commodities Exchange ended up on Thursday's USDA crop report, sources said. The May contract settled up RMB/17 to RMB 1,476/tonne.