December 29, 2006

 

CBOT Corn Outlook on Friday: Firmer on strong exports, e-CBOT

 

 

Corn futures at the Chicago Board of Trade are expected to trade 1 to 2 cents firmer Friday, on supportive export sales data and overnight strength.

 

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

 

In e-cbot trade, March corn gained 1 1/4 cent to US$3.89 3/4 a bushel.

 

Weekly export sales data from the U.S. Department of Agriculture were 1.15 million metric tonnes. This compares to trade estimates of 800,000 to 1.100 million tonnes. Sales were delayed one day due to the Christmas holiday. Sales were 9% below the previous week, but 3% over the prior 4-week average. Buyers of note included Taiwan, which bought 185,000 tonnes; Mexico, which bought 161,700 tonnes, including 24,000 tonnes switched from unknown destinations; and Japan which bought 104,500 tonnes.

 

"These exports were strong and should lend early support," said Victor Lespinasse, floor broker for A.G. Edwards.

 

Early trade is expected to be firmer, but once the market digests the export sales, a slow session is expected. "We're expecting a very quiet, typical year-end trade," Lespinasse said.

 

Friday is the last trading day for 2006. The CBOT will close at 1:00 p.m. EST Friday ahead of the New Year's holiday. The exchange is closed Monday for New Year's Day.

 

The CBOT is expected to make an announcement later Friday on regarding its plans for Tuesday's national day of mourning for the late President Ford. The CBOT was closed for business on the day of President Reagan's funeral in 2004. If the CBOT does cancel trading Tuesday, it would create an unusual four-day break in trading due to the New Year's Day holiday on Monday.

 

A technical analyst said Thursday's price action in March corn "reveals a lack of upside conviction in the bullish camp as key near-term resistance at US$3.93 remained just out of reach," the analyst said. If bulls want to continue momentum higher, "the contract high at US$3.93 must fall in the days ahead."

 

The analyst said considering corn has gained smartly during the last two weeks, near-term corrective and/or consolidative trade is likely before the bulls mount another attack on US$3.93. Key short-term support lies at US$3.83 1/2, Tuesday's low. "If a push below that floor is achieved, it would open the door for a more serious corrective pullback near term, with next support at US$3.77, roughly 50% of the latest upmove," the analyst said.

 

Analysts said market participants are expected to push corn aggressively either way going into the last business day of 2006. When the markets reopen for trade in 2007, there is a bias that index fund-type buying might return and support corn. "Rightly or wrongly that's what people are expecting. People aren't comfortable getting short over this concern," Lespinasse said.