February 2, 2007

 

CBOT Corn Outlook: Flat to up 1 cent; lacks fresh influences

 

 

Chicago Board of Trade corn futures are seen starting Friday's day session with a steady undertone, taking their cue from overnight price action, as the market remains range bound in the absence of fresh market influences.

 

Analysts expect corn to open flat to 1-cent higher.

 

In overnight electronic trading, March corn ended unchanged at US$3.98, May corn finished 1/4-cent lower at US$4.09 1/2, and December corn was 1/4-cent higher at US$3.92 3/4.

 

A quiet news front is seen keeping technical factors in focus, with a mixed tone in outside market providing little direction to prices as well, analysts said.

 

Meanwhile, scale down commercial buying seen in recent sessions is expected to limit declines, but downside momentum may pick up if the market is successful in challenging support at the bottom end of the market's recent range - US$3.96 basis March futures, analysts added.

 

A technical analyst said recent price action has formed a fledgling downtrend channel on the March daily bar chart. However, market bulls still have the near-term technical advantage, with no serious chart damage occurring recently. Nevertheless, bullish traders do not want to see a weekly low close on Friday, as bulls would gain better upside technical momentum by producing a close above chart resistance at US$4.10, he said. The bears' next downside price objective is producing a close below solid chart support at US$3.92.

 

First resistance for March corn is seen at US$4.00 and then at US$4.05. First support is seen at this week's low of US$3.96 and then at US$3.92.

 

Otherwise, light support is seen from increased feedings amid the cold wave engulfing the central U.S. Nevertheless, March futures are poised to hover near the psychological US$4.00 per bushel level, with traders tacking cautious role ahead of the weekend and next Friday's supply and demand reports, a CBOT floor analyst said.

 

U.S. Midwest cash corn basis bids were mostly steady Friday, cash traders said. Spot U.S. cash corn bids were up 1-cent in Evansville, Ind., and down 1-cent in Peoria, Ill.

 

The DTN Meteorlogix weather forecast said the US and European models are in fair to good agreement during the next 10 days. This is a strong ridge west/trough east pattern for another 5-6 days. The coldest of the series of cold air masses is expected to move out of Canada and into the Midwest early next week. After that the next air mass may not be as cold.

 

In Argentina, very hot, mostly dry, weather will continue for another couple of days. After that it does not look as hot or as dry but the rainfall may still average below normal in the west.

 

In other news, Mexico's main 2006 white corn harvest in the central state of Jalisco was down 33% at 2,034,682 metric tonnes from last year, the Agriculture Ministry's statistical arm SIAP said Thursday. The Jalisco white corn harvest ended sharply below expectations following a dry spell last year that led to severe crop damage, final figures were based on data updated through Dec. 31.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower. With temperatures turning warmer, its difficult to maintain a high level of corn stocks, and some farmers are entering the market on the offer, analysts said. The September contract fell RMB6 at RMB1,710/tonne.