December 22, 2006

 

CBOT Corn Outlook on Friday: 1-2 cents higher, following overnight trade

 

 

Chicago Board of Trade corn futures are expected to start trading 1-to-2 cents higher Friday, following the tone set in overnight trading, sources said.

 

The CBOT will close at 12:00 p.m. CST Friday and will be closed Monday for Christmas.

 

In overnight e-CBOT trading, March corn rose 2 cents at US$3.79 3/4 per bushel and May gained 2 1/4 cents to US$3.87 3/4. e-CBOT volume in March was 5,751 contracts.

 

Strong technical buying at Thursday's close carried over into the overnight session and should supply some support in Friday's trade, said Brian Hoops of Midwest Market Solutions in a note to clients.

 

The lack of fresh news also has the market focused on technical signals for price direction, he said.

 

Some support for prices could also be generated from some participants getting long, remembering last year when the index funds were big buyers at the start of the year and don't want to be left behind if it happens again, a commission house analyst said.

 

Trading volume should be light and activity two-sided as some market participants are expected to be absent with a lack of fresh news also limiting interest, he added.

 

On day session open auction technical charts, March corn reached a three-week high as the bulls are regaining upside technical momentum, and have a solid near-term technical advantage, a market technician said. The bulls' major upside objective is closing prices above solid resistance at US$3.80 per bushel and above that lies major psychological resistance at US$4.00 per bushel, the technician added. The bears' near-term objective remains closing prices below solid support at this week's low of US$3.62.

 

First resistance is seen at US$3.78 1/2 and then at US$3.80. First support is pegged at US$3.75 1/4 and then at US$3.70.

 

Cash corn basis bids were mostly unchanged Friday. Central Illinois was down 1 cent at 5 cents under March.

 

In other corn news, rising supplies and sluggish demand trimmed positive sentiment among Chinese grain traders in the week ended Wednesday, a weekly survey from China's National Grains and Oils Information Center reported Friday.

 

Officials from Tongliao, a city in China's Inner Mongolia Autonomous Region announced plans to construct an ethanol plant with the capacity to produce 500,000 metric tonnes of ethanol annually, a local official said Friday.

 

Corn futures on China's Dalian Commodities Exchange ended solidly higher with the benchmark May contract settling up RMB/17 at RMB 1,643/tonne.