October 27, 2006

 

CBOT Corn Outlook on Friday: 3-5 cents higher on overnight gains, wheat

 

 

Chicago Board of Trade corn futures are expected to begin Friday's session 3 to 5 cents higher, following the tone established in overnight trading and spillover from the strength in wheat, sources said.

 

In overnight e-CBOT trading, December corn gained 5 1/2 cents to US$3.32 1/2 cents per bushel and March also rose 5 1/2 cents to US$3.45. e-CBOT volume in December was 4,887 contracts.

 

The strength in the overnight prices should support corn with spillover sympathy from the wheat expected to supply additional strength, a floor analyst said.

 

The Australian Bureau of Agricultural & Resource Economics estimated the Australian 2006-07 wheat crop at 9.5 million metric tonnes, 62% lower than last year's 25.1 million tonnes crop.

 

The continued strong demand for corn from importers should also underpin the market, a commission house analyst said. Despite the recent high prices, export sales remain firm, he noted.

 

Thursday's weekly export sales were 1.046 million metric tonnes, slightly above analyst expectations.

 

In addition, U.S. Department of Agriculture reported Friday morning that 120,000 metric tonnes of corn had been sold to unknown destinations for delivery in the 2006-07 crop year.

 

The corn market is looking for a correction as it is overbought, but it continues to feed off the bullish sentiment that more acres are needed to supply enough corn for next year and beyond, a market analyst noted.

 

On day session open auction technical charts, December corn futures next upside price objective is closing prices above longer-term technical resistance at US$3.35 1/4 per bushel, a technical analyst said. The bears' near-term downside price objective is closing prices below solid support at US$3.00. 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, and then at US$3.21 3/4, Thursday's low.

 

Cash corn basis bids were unchanged to higher Friday. Champaign, Ill., was up 4 cents at 8 cents under the December future.

 

In other corn news, sentiment among Chinese grain traders was mixed in the week ended Wednesday. Prices picked up while demand remained sluggish, according to a weekly survey by China National Grains and Oils Information Center released Friday. Although prices held at a high level, traders were bearish on corn, expecting prices to fall when the new harvest comes to market later this year, the survey said.

 

Corn futures at China's Dalian Commodities Exchange settled higher. The May contract rose RMB/18 to RMB 1,482/tonne.

 

Friday afternoon the Commodity Futures Trading Commission will release the latest commitment of traders' data for the period ending Oct. 24.