November 2, 2007

CBOT Corn Outlook on Friday: Up 1-2 cents on position squaring, outside markets

Chicago Board of Trade corn futures are expected to begin trading 1-to-2 cents higher Friday, bolstered by firm outside market prices and position squaring after Thursday's losses, an analyst said.

In overnight electronic trading December corn rose 2 1/2 cents to US$3.71 1/4 per bushel and March also rose 2 1/2 cents to US$3.88 1/2. E-CBOT volume in December was 10,207 contracts.

Higher crude oil prices and a weaker U.S. dollar is a friendly combination and corn should begin trading higher, an analyst said. The market continues to follow the influence of the inflationary commodity markets with the fundamentals currently having little impact, he added.

A crop estimate from FCStone is not expected to have much impact. Thursday afternoon the firm estimated U.S. corn production at 13.240 billion bushels with a yield of 153.8 bushels per acre. In October, the U.S. Department of Agriculture estimated the crop size at 13.318 billion bushels with a yield of 154.7 bushels per acre. The market expected the firm's number to be lower than what the USDA reported last month so the estimate will likely have little impact, a trader said.

Harvest weather over the near-term will likely remain favorable, DTN Meteorlogix Weather said.

Dry weather is expected Saturday with only a few light showers possible Sunday in the western U.S. Midwest, with dry weather forecast through Sunday in eastern sections of the region. Temperatures are expected to average near-to-above normal in the period.

On daily open auction technical charts, December corn closed lower and near the session low as trading has turned choppy, an analyst said. Corn will continue to track crude oil and gold markets which were both lower on Thursday, the analyst said. The bulls' next upside objective is to close prices above solid resistance at US$3.80, this week's high. The next downside price objective for the bears is closing prices below support at US$3.60.

First resistance for December corn is seen at Thursday's high of US$3.74 1/2 and then at US$3.80. First support is seen at US$3.67, Thursday's low and then at US$3.63.

In other corn news, corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract up RMB8 to RMB1,725/tonne.