December 13, 2007

 

CBOT Corn Outlook on Thursday: 1-2 cents higher on follow through momentum

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 1-to-2 cents higher Thursday as follow through speculative and technical buying from Wednesday's strong gains and spillover from wheat futures are expected to supply support to prices, analysts said.

 

In overnight electronic trading, March corn rose 1/2 cent to US$4.33 3/4 cents per bushel. E-CBOT volume in March was 11,771 contracts.

 

The market should start out higher based on follow through from Wednesday's gains and spillover from stronger wheat futures in overnight activity, a commission house analyst said. Speculative buying pushed commodities higher Wednesday and corn could see additional strength if that continues, the analyst said.

 

Export sales were supportive and were within the range of analyst estimates, a floor trader said. The U.S. Department of Agriculture reported weekly corn export sales were 1.466 million metric tonnes for the week ended Dec. within the 1.0-to-1.85 million tonnes expected by analysts. Included in the total were sales of 310,000 tonnes for delivery in the 2008-09 marketing year.

 

Hot and dry weather in western growing areas of Argentina is also a supportive factor, the trader said. Although rain is possible Friday and Saturday in Argentina, the extended forecast through Tuesday is mainly dry, DTN Meteorlogix Weather said.

 

On daily open auction technical charts, March corn futures reached yet another fresh 5 1/2 month high and are near setting a new contract high, above the US$4.39 set in June. Stronger "outside markets" gold and crude oil helped fuel the rise in prices on Wednesday, a technical analyst said. A two-month old uptrend is in place on the daily bar chart, however, the market is overbought technically and a downside correction is due very soon, the analyst said. The next upside objective is to close prices above solid technical resistance at the contract high of US$4.39 per bushel with the next downside objective closing prices below solid support at US$4.10.

 

First resistance for March is seen at US$4.33 3/4, Wednesday's high and then at US$4.39. First support is seen at Monday's low of US$4.30 and then at US$4.25. Deliveries posted against the Chicago Board of Trade December future were 2,754 contracts Thursday. Large issuers included the customer account of Man Professional Clearing which issued 495 contracts and the customer account of MF Global, which issued 829 contracts. Large stoppers included the customer account of Man Professional Clearing, which stopped 651 contracts, the customer account of the Astro division of UBS Securities, which stopped 340 contracts and the customer account of Cunningham, which stopped 290 contracts. The last trade assigned was Dec. 12.

 

In other corn news, EU corn imports will reach 11.3 million metric tonnes in 2007-08, analytical firm Strategie Grains said Thursday. This estimate is 2.3 million metric tonnes above the firms' November estimate. Large volumes of Brazilian corn will arrive later in the marketing year with much of the increase expected to go to Spain and Portugal.

 

China's domestic supply and demand for major agricultural commodities are balanced with state reserves for grain sufficient, a government official said Thursday.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB10 to RMB1,745/tonne.