January 3, 2007

 

CBOT Corn Outlook on Wednesday: 7-9 cents lower, following overnight losses

 

 

Chicago Board of Trade corn futures are expected to start trading 7-to-9 cents lower Wednesday, following the tone set in overnight trading, sources said.

 

In overnight e-CBOT trading, March corn fell 8 1/2 cents to US$3.81 3/4 per bushel and May declined 8 cents to US$3.90 1/2. e-CBOT volume in March was 5,422 contracts.

 

Crude oil is lower, and there is good snow cover for the winter wheat in the southern U.S. Plains, alleviating some earlier concerns over dryness, a commission house analyst said.

 

In addition, some people are liquidating their positions as participants are unsure of what the funds will do at the start of the year, he added. The funds were the big players last year and people will want to see what they do in the new year, he said.

 

Large commercial traders increased their short corn futures and options positions and slightly increased their long holdings and are now overall net short 203,293 contracts, an increase of 16,254 contracts from the previous week, the Commodity Futures Trading Commission reported Friday.

 

Large speculative traders slightly increased their long corn futures and option positions and are now long 297,398 contracts as of Dec. 26, the CFTC said.

 

On day session open auction technical charts, March corn closed at a fresh four week high and the bulls have regained technical momentum, a technical analyst said. The bulls' next upside price objective is closing prices above solid resistance at US$4.00 per bushel with the next downside price objective closing prices below solid support at US$3.80.

 

First resistance is seen at the contract high of US$3.93 and then at US$4.00. First support is pegged at Friday's low of US$3.87 1/2 and then at last week's low at US$3.83 1/2.

 

Cash corn basis bids were mostly unchanged Wednesday. Central Illinois was unchanged at 5 cents under March.

 

In other corn news, cash prices for corn delivered to Asia may rise in the week ahead as export demand for U.S. corn has been robust recently, sources said.

 

Philippine corn production is expected to increase 3% to 6.31 million metric tonnes in 2007, up from last year's record 6.14 million tonnes, the Philippine Department of Agriculture said Wednesday.

 

Due to high domestic prices, the Philippine poultry industry has asked the government to allow the import of up to 700,000 metric tonnes of corn at zero tariff, a senior agriculture official said.

 

The U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CST.