November 1, 2007

 

CBOT Corn Outlook on Thursday: 2-3 cents higher on inflationary buying

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 2-to-3 cents higher Thursday, supported by continued strength in outside inflationary markets as crude oil rallied to another new all-time record in overnight activity.

 

In overnight electronic trading December corn gained 3 1/4 cents to US$3.78 3/4 per bushel and March rose 3 1/2 cents to US$3.96 1/4. E-CBOT volume in December was 4,621 contracts.

 

Spillover strength from the continued strength in crude oil supported corn in the overnight session and should underpin prices in day session activity, a commission house analyst said. However, gains might be tempered as the dollar was stronger overnight versus other major currencies and gold and silver are weaker. Besides the higher inflationary crude oil market, there is little fresh news out to help determine price direction, he added.

 

Nearby crude oil reached a new high of US$96.24 per barrel.

 

Weaker-than-expected weekly corn export sales might limit the upside. The U.S. Department of Agriculture reported 2007-08 weekly corn export sales were 635,300 metric tonnes for the week ended Oct. 18, below the 700,000-to-1.2 million tonnes expected by analysts. A trader termed the sales as "disappointing."

 

The harvest of the U.S. corn crop should remain uninterrupted over the next several days in the U.S. Midwest with mainly dry weather expected over the next several days, DTN Meteorlogix Weather said.

 

On daily open auction technical charts, December corn closed higher and hit a fresh four-week high before finishing near mid-range. Price action did negate a mini island top created on Tuesday, a technical analyst said. The new record high in crude oil prices helped bulls regain momentum as the gains in crude oil have helped corn and its ethanol component, the analyst said. The bulls' next upside objective is to close prices above solid resistance at the September high of US$3.89 1/2. The next downside price objective for the bears is closing prices below support at US$3.67, which would fill an upside price gap on the daily chart.

 

First resistance for December corn is seen at Wednesday's high of US$3.80 and then at US$3.85. First support is seen at US$3.70 and then at US$3.68 3/4, this week's low.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB11 to RMB1,717/tonne.

 

Thursday afternoon after the close, FCStone is expected to release its updated forecast of corn production and yields.