February 16, 2006

 

CBOT Corn Outlook on Thursday: Steady up 1 cent, in step with e-CBOT

 

Chicago Board of Trade corn futures are expected to start Thursday's open auction session steady to firm, in step with overnight action, as traders watch for follow-through buying from Wednesday's late bounce.

 

Analysts expect corn futures to open steady to 1 cent per bushel higher.

 

In overnight electronic trading, March corn was 1 cent higher at US$2.23, and May corn was 1 cent higher at US$2.33 1/4 per bushel.

 

A general lack of fresh fundamental news has traders looking for direction, but with good weekly export sales and a chance for a follow-through from Wednesday's late short covering gains, the market may find early support, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

However, with weekly sales tapering off from its recent levels and business more routine, traders may await reports from U.S. Department of Agriculture's outlook forum for 2006-07 marketing year balance sheet projections, Roose added.

 

The USDA forum runs Thursday through Friday.

 

The liquidation of March positions heading toward first notice day Feb. 28 is expected to be a key ingredient as well, with traders watching options activity ahead of Friday's expiration of options on March futures.

 

Technical analysts said last week's high of US$2.36 3/4 is still solid overhead technical resistance for the market to overcome. A close below US$2.25 is expected to provide market bears with fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.32 1/2 -Wednesday's high - and then at US$2.35. First support is seen at US$2.30 and then at US$2.27 1/2 - Wednesday's low.

 

Nevertheless, with a projected 2.4 billion bushel carryout, upside potential may be tough to hold without fund buying support, with analysts expecting traders to begin jockeying for position heading toward an extended holiday weekend, said a CBOT commission house broker.

 

The U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 1,197,300 metric tonnes, 25% below the previous week and prior four-week average. Major buyers include Japan, in for 424,200 tonnes, and South Korea, buying 227,100 tonnes. 2006-07 marketing year sales were 52,500 metric tonnes. Trader expectations ranged from 1,000,000 to 1,200,000 tonnes.

 

USDA said private exporters reported export sales of 54,000 metric tonnes of corn for delivery to the Dominican Republic during the 2005/2006 marketing year and export sales of 72,000 tonnes to the Dominican Republic during the 2006/2007 marketing year.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said no significant rain is expected during the next 5-7 days in Argentina. Temperatures remain hot, with long-range charts continue to feature a cold front passage but it is again delayed. It now looks to move in later Wednesday or during Thursday, Meteorlogix added.

 

Meanwhile, Taiwan's Members Feed Industry Group bought 58,000 metric tonnes of U.S. No. 2 yellow corn for March-April delivery from trading house Agrex in a tender concluded Thursday, said a Taipei-based trader.

 

State-owned China Grain Reserves Corp., which manages the country's grain reserves, sold 48,000 metric tonnes of corn in northeastern Heilongjiang province in a tender concluded Tuesday for RMB1,165/tonne on average, said an industry official Thursday.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mostly higher on new long buying, after an active trading session. The benchmark September 2006 contract rose RMB16 to settle at RMB1,481/tonne, after trading between RMB1,470/tonne and RMB1,489/tonne.