November 17, 2006

 

CBOT Corn Outlook on Friday: Firmer start seen, later sales possible

 

 

Corn futures at the Chicago Board of Trade are expected to trade steady to firmer Friday, supported by overnight gains, but the potential for profit taking lurks, market participants said.

 

Most active December is called to open steady to 1 cent a bushel higher.

 

In e-cbot trade, December corn was up 1 cent to US$3.52 1/2 a bushel.

 

A rebound from Thursday's lower close is expected to underpin corn futures in early dealings, brokers said. However, given this is the last full trading week before the Thanksgiving holiday, some further profit taking can't be ruled out.

 

"We're going to start out firmer. Yesterday was a (poor) technical trade, so to see it bounce overnight was no surprise. I'm expecting a dead-cat bounce, but we're also poised for liquidation," said Don Roose, president, U.S. Commodities.

 

Despite December's lower close Thursday, a technical analyst said the bulls still have the near-term technical advantage. Their next upside price objective is a close above technical resistance at the contract high of US$3.67 a bushel. The bears' next near-term downside price objective is a close below solid support at US$3.40. First resistance for December corn is seen at US$3.55 and then at US$3.60. First support is seen at Thursday's low of US$3.50 and then at US$3.45.

 

Roose said corn will likely keep an eye on crude oil, which was down nearly US$1 in overnight trade at the New York Mercantile Exchange, but corn bulls have their own issues to consider.

 

"The market is bloated with fund longs. The (cash) pipeline is recharged after farmer sales and that leaves us vulnerable to fund liquidation. Plus we saw some commercial sales here," Roose said.

 

He added corn's inability to respond to bullish news also suggested any early gains will likely not be held.

 

In other news, rising corn prices in China lifted sentiment among Chinese grain traders, according to a weekly survey by China National Grains and Oils Information Center released Friday. Traders' bullishness on corn rose remarkably this week, with corn prices soaring in eastern and southern provinces. Farmers were reluctant to sell their harvest, making supplies tight, it added.

 

A bumper harvest of corn in the Philippines this year could significantly reduce imports of wheat and corn for feed milling in 2007, an industry executive said Friday. The Philippines' 2006 corn output could reach a record high of 6.14 million metric tonnes, up 17% over last year's corn production, mainly on favorable weather conditions, the Philippine Department of Agriculture said early this week.

 

While the Philippines expects a bigger harvest, India might now consider keep its corn supplies at home. India may consider imposing a ban on corn exports, Commerce and Industry Minister Kamal Nath said Friday. He said the agriculture ministry is examining corn production data to check whether there is a shortfall in local supplies. India is a regular exporter of small volumes of corn to neighboring Sri Lanka, Nepal and Bangladesh. Earlier this month, a cargo of around 15,000 metric tonnes was also shipped to a Malaysian port.

 

In biofuel news, ethanol imports to the U.S. in September fell sharply from last month's record high, according to preliminary data from the federal Energy Information Administration.

 

September imports of the gasoline additive stood at 2.194 million barrels, down from 3.203 million barrels in August, and 2.42 million barrels imported in July. June imports totalled 1.546 million barrels.

 

A drop in prices slowed imports. The bulk of the imports came from Brazil and most of that volume - 1.318 million barrels of the 1.449 million Brazil total - was bound for the East Coast.