December 28, 2006

 

CBOT Corn Outlook on Thursday: Firmer following e-CBOT, soy complex

 

 

Corn futures at the Chicago Board of Trade are expected to trade 1 to 2 cents firmer Thursday, following sharp gains in the soy complex and a firmer overnight trade.

 

Most active March is called to open 1 to 2 cent firmer.

 

In e-CBOT trade, March corn gained 2 3/4 cent to US$3.88 1/2 a bushel.

 

Soy complex futures were strong overnight, with soyoil rising the most of the three oilseed contracts. Gains in soyoil came from rallies in Malaysian palm oil futures to eight year highs. Floods in Malaysia's southern state of Johor may persist, disrupting supplies. Johor is the country's second-largest palm oil producing state, accounting for about 15% of annual crude palm oil output.

 

The latest weather forecasts predicted more bad weather in the coming days. The impact of the floods on palm oil production remains unclear, though there are fears that output would drop as harvesting is delayed. On Jan. 10, new production data are due out.

 

"These markets are really following each other to a large degree," said John Kleist, analyst at Top Third Ag Marketing. "We're getting close to the end of the year and there's been no significant selling. The funds will likely want to keep corn in the upper trading range to dress up the books before the quarter-end and year-end."

 

A technical analyst said the fact March corn didn't close below a chart gap filled on Wednesday's action is modestly constructive for the bulls. Although the technical uptrend is intact, Wednesday's softer close suggests bulls might be "tired and may be vulnerable short term," the technical analyst said. Resistance is at the contract high of US$3.93 a bushel. First support lies at US$3.83 1/2.

 

Weekly export sales, normally due out on Thursday from the government, are delayed one day due to the Christmas holiday.

 

Corn will likely drift in the high range of steadiness "as there's no negative news out for corn," one grain analyst.

 

In other news, Wednesday after the market's close, the U.S. Department of Agriculture released its quarterly hogs and pigs report. USDA pegged hogs and pigs kept for breeding at 101%, matching the average of analysts' predictions, within the projected range of 99.8% to 101.4%.

 

"The breeding number, much like the cattle placement number from last week, indicates there is no sign of recoiling from high corn prices in the livestock sector," Kleist said.