February 6, 2006

 

CBOT Corn Outlook on Monday: Seen up 1 cent; e-CBOT, follow through

 

 

Corn futures on the Chicago Board of Trade are seen starting Monday's open auction session modestly higher, in tune with overnight action and follow through momentum from Friday's advances.

 

In overnight electronic trading, March corn was 1 cent higher at $2.26 1/4, and May corn was 1 1/4 cent higher at $2.36 1/4 per bushel.

 

Fundamental influences continue to point to lower price action, but as long as the funds push futures through technical resistance levels, there remains room for upside potential, analysts said.

 

Market technicians said market bulls gained solid upside technical momentum Friday, and the price action could have been an upside "breakout" from a bull flag pattern on the daily bar chart.

 

First resistance for March corn is seen at $2.25 3/4--Friday's high--and then at $2.27. First support is seen at $2.21 and then at $2.18.

 

However, the market is overbought, as fund buying has been stretched out, and with improved crop conditions in South America and the trade reminded of supply bearish fundamentals heading into Thursday's crop report, upside movement maybe curtailed, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Part of the overnight gains was tied to limit up price movement in China, as that market played catch up following a week long closure due to Lunar New Year Holiday celebrations, added Roose.

 

DTN Meteorlogix Weather Service said beneficial rains were experienced late last week and early in the weekend in Argentina, but it looks to be drier during this week but not very hot.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 84,154 lots in corn as of Jan. 31.

 

Corn futures open interest at the CBOT, rose by 44,335 contracts on Friday based on preliminary volume and open interest data released by the exchange. Corn open interest propelled to a record 1,041,857 contracts.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CST (1600 GMT).

 

In overseas markets, corn futures traded on the Dalian Commodity exchange settled limit-up Monday after aggressive buying in the morning session. The benchmark September 2006 contract rose RMB54 to settle at RMB1,493/tonne, its all-time high. Analysts said corn's use as a raw material to produce ethanol, which is being promoted by the government is an underpinning feature.

 

In other news, Ukraine's agrarian exchanges reported in January export 3rd grade corn contracts in January totaled 163,180 tonnes, 2.8 times less than in December 2005, according to the agrarian exchanges union.