January 6, 2006

CBOT Corn Outlook on Friday: Slightly higher start, following e-CBOT

Corn futures at the Chicago Board of Trade are expected to begin trading Friday at slightly higher levels as steady prices overnight, spillover support from soybeans and higher outside markets are expected to provide early strength, floor sources said.

In overnight e-CBOT trading, March corn gained 3/4 cent to US$2.16 1/4 per bushel, May corn rose 1/4 cent to US$2.25, and July corn increased 1/2 cent to US$2.33 1/4 per bushel.

Although outside markets are higher, the funds remain the key to price direction, a floor trader said. Commodity funds have recently gone from a net short position to a net long position, traders said. The market has also been anticipating buying from commodity index funds which tend to buy and hold futures. Last year, an early season rally was supported by index fund buying, sources said.

There is not much news out this morning and export sales were in line with analyst expectations and won't provide much help to prices, a floor analyst said.

The U.S. Department of Agriculture reported Friday morning that weekly corn export sales were 536,000 metric tonnes for the week ended Dec. 29, within the range of analyst's expectations of 450,000-650,000 metric tonnes.

Argentina's corn crop is entering its critical pollination stage over the next several weeks. Mostly dry conditions with light scattered showers are expected over the next several days in Argentina, with above to much above normal temperatures, DTN Meteorlogix weather said. Scattered shower and thundershowers are forecast for Tuesday with temperatures near to above normal, Meteorlogix said.

Cash corn basis bids were mixed Friday. Central Illinois was unchanged at 3 cents over the March, with St. Louis down 4 cents at 2 cents under the March.

In technical trading, bulls are losing technical momentum and do not want to see a weekly low close on Friday, market technicians said. A close back below US$2.12 would provide bears with fresh downside technical momentum, they said. First resistance for March corn is seen at US$2.16 3/4, Thursday's high and then at US$2.18. First support is set at US$2.13, Thursday's low and then at US$2.12.

In other corn news, Corn futures traded on China's Dalian Futures Exchange finished mostly lower Friday, with the most active September contract gaining RMB2, ending at RMB1,388/tonne.