November 10, 2006

 

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

 

 

Chicago Board of Trade corn futures are forecast to start trading 1 to 2 cents lower Friday as follow through selling from Thursday's losses and weaker prices in overnight activity are expected to weigh on the market, sources said.

 

In overnight e-CBOT trading, December corn slipped 2 cents to US$3.48 per bushel and March declined 1 3/4 cents to US$3.64 1/4. e-CBOT volume in December was 6,664 contracts.

 

Corn should see two-sided activity Friday, a floor trader said. The market could see some follow through selling from Thursday's price weakness and lower prices in the overnight trade. In addition, there was little fresh news out overnight and the government is closed for the Veteran's Day holiday, so some traders are expected to start their weekend early, he added.

 

Although corn could trade in negative territory, price direction will be determined by speculative interests and what they want to do, a commission house analyst said.

 

On day session open auction technical charts, Thursday's price weakness didn't produce serious chart damage, a technical analyst said. However, strong follow through selling on Friday would begin to produce some near-term technical damage so Friday's price action will be extra important, the analyst added.

 

Market bulls are still technically strong and their next upside price objective is closing prices above technical resistance at the contract high of US$3.67 per bushel, the analyst said. The bear's next near-term downside price objective is closing prices below support at US$3.34 which would fill on the downside a big upside price gap on daily bar charts. First resistance for December corn is seen at US$3.55 and then at US$3.60, with first support pegged at US$3.48 and then at US$3.45.

 

Cash corn basis bids were mixed Friday. Central Illinois was unchanged at 13 cents over the December future.

 

In other corn news, China's National Development and Reform Commission issued 4 million metric tonnes of corn export quotas this week, a Chinese trader said Friday.

 

However, the country's top economic planning agency isn't expected to issue any new export quotas for further corn exports in the near future because of concerns over a possible shortage in domestic supplies, sources said.

 

Earlier this fall, Chinese companies signed contracts to export over 4 million metric tonnes of corn for delivery this year and early next year.

 

In Thursday's U.S. Department of Agriculture report, the USDA increased its 2006-07 Chinese corn production estimate to 143 million metric tonnes, up 2 million tonnes from its previous report.

 

South Korea's Nonghyup Feed Inc. purchased up to 165,000 metric tonnes of optional-origin corn in a tender concluded late Thursday, a Seoul-based trader said.

 

A combination of higher prices and stronger demand lifted sentiment among Chinese grain traders in the week ended Wednesday, according to a weekly survey by the China National Grains and Oils Information Center released Friday. Traders turned bullish on corn this week supported by noticeable gains in corn prices across the country, the survey reported.

 

Corn futures at China's Dalian Commodities Exchange settled lower pressured by declines in CBOT prices an analyst said. The May contract declined RMB9 to RMB 1,511/tonne.