November 30, 2007

 

CBOT Corn Outlook on Friday: Down 2-3 cents on deliveries, outside influences

 

 

Corn futures on the Chicago Board of Trade are poised for a lower day session trade Friday, in tune with the overnight theme amid large deliveries and borrowed weakness from outside markets.

 

Crude oil futures and metal futures are lower in early action, with the U.S. dollar index higher.

 

Analysts expect corn to open 2 to 3 cents lower.

 

In overnight electronic trading, December corn was 1 3/4 cent lower at US$3.81 3/4, and March corn was 2 1/4 cents lower at US$3.98 1/2.

 

A quiet news front is keeping attention on the outside markets for initial direction, with the backdrop of larger-than-expected deliveries adding a twist to aide the defensive tone, analysts said.

 

Broad based commodity weakness is expected to keep corn following suit, with end of the week and month position squaring helping promote a lower tone, analysts added.

 

Technical factors are seen coming into play, with watching for signs of selling exhaustion or follow through momentum as active contracts dip below nearby support levels on technical charts, a CBOT floor broker said.

 

A technical analyst said corn bulls still have the near-term technical advantage. The next upside price objective for March corn is to push and close prices above solid technical resistance at this week's high of US$4.09 a bushel. The next downside price objective is to push prices below solid support at US$3.95.

 

First resistance for March corn is seen at US$4.05 and then at US$4.07 1/2. First support is seen at this week's low of US$3.97 3/4 and then at US$3.95.

 

December corn deliveries totaled 3,403 lots. Analysts surveyed by Dow Jones Newswires anticipated deliveries in a range of 500 to 2,500 lots. Customer accounts at J.P. Morgan and Astro Div of UBS Securities were the primary issuers of 1,766 and 1,018 lots respectively. Stoppers were scattered across various commission houses. The last trade date assigned was Nov. 15.

 

The DTN Meteorlogix weather forecast said a few scattered showers are on tap for Saturday and again Tuesday in Argentina. This will favor early growth of crops but a more widespread rain is needed in the western growing region of Cordoba. Hot temperatures Friday and the weekend will give way to cooler temperatures early next week, Meteorlogix forecasts. However, hot weather may redevelop towards the end of next week.

 

In other news, traders said China will release at least 2 million tonnes of corn into non-producing regions to curb surging feedmeal prices, and it has been increasing the volume of wheat it sells during its weekly auctions.

 

European Union licenses to import corn climbed to 6.78 million metric tonnes as of Nov. 27, up 380,000 tonnes on the week, according to E.U. data Friday. This is up from just 1.94 million tonnes for the same date last year. Most of the corn is said to be from Brazil and the sorghum from the U.S.

 

China's corn prices are unlikely to fall much despite more corn coming to market during the current harvest season. Farmers' and traders' reluctance to sell corn amid overall inflation expectations will continue to keep corn prices at current high levels ahead of the Chinese New Year holiday in early February, according to industry participants.

 

Meanwhile, an expected rise in domestic corn consumption triggered by strong demand for feed corn in the poultry sector may lead to lower corn exports by Thailand next year, the president of the Thai Feed Mill Association has said.