October 26, 2006

 

CBOT Corn Outlook on Thursday: Down 1-2 cents on overnight weakness

 

 

Chicago Board of Trade corn futures are forecast to start trading 1-2 cents lower Thursday as weaker prices overnight and profit taking are expected to weigh on prices, sources said.

 

A lower start expected in wheat futures is also expected to weigh on the market but sources cautioned trading is expected to be choppy.

 

In overnight e-CBOT trading, December corn fell 2 1/2 cents to US$3.24 1/2 cents per bushel and March declined 1 3/4 cents to US$3.37 1/2. e-CBOT volume in December was 7,411 contracts.

 

Corn should begin trading weaker reflecting the lower values overnight and on profit taking, a floor trader said. The market is overbought and due for a correction, with Wednesday's weak close well off from contract highs set earlier a negative, he added.

 

Spillover weakness from wheat may also keep the market on the defensive, a commission house analyst said. Wheat futures are called to open 6-8 cents lower.

 

The U.S. Department of Agriculture reported weekly corn export sales at 1.046 million metric tonnes for the week ended Oct. 19, slightly above the 700,000-1.0 million tonnes expected by analysts. Mexico and Japan were the largest buyers. A floor source termed the sales as "nothing great".

 

On day session open auction technical charts, December corn futures hit a fresh contract high Wednesday but closed nearer the session low, a market technician said. The price action did form a rare and potentially bearish broadening pattern on the daily bar chart, he added.

 

The bulls' next upside price objective remains closing prices above solid resistance at US$3.50 per bushel and the bear's next near-term downside price objective is closing prices below solid support at US$3.00, the technician said. First resistance for December corn is seen at US$3.30, and then at US$3.33 3/4, the contract high. First support is seen at US$3.25, Wednesday's low and then at US$3.20.

 

In other corn news, analysts are divided over the size of China's corn crop, with the U.S. Grains Council; a U.S. farm lobbying group saying the crop may be lower than last year while a Chinese government-backed research body indicates production may be higher than last year.

 

Currently China estimates its corn crop at 141 million metric tonnes, while the U.S. Grains Council estimates it may be up to 1.4 million tonnes less. In 2005, China produced 139.4 million metric tonnes.

 

Israel purchased 60,000 metric tonnes of U.S. corn overnight, sources said.

 

Corn futures at China's Dalian Commodities Exchange settled lower. The May contract fell RMB/12 to RMB 1,464/tonne.