January 4, 2006

 

CBOT Corn Outlook on Wednesday: Seen slightly lower on profit-taking

 

 

Corn futures at the Chicago Board of Trade are expected to begin Wednesday's open auction trading flat to down one cent on profit-taking after Tuesday's rally and weaker prices in overnight electronic trade, sources said.

 

In overnight e-CBOT trading, March corn slipped 1/2 cent to USUS$2.19 1/2 per bushel, May corn fell 1/2 cent to USUS$2.28, and July corn also declined 1/2 cent to USUS$2.35 1/2 per bushel.

 

The funds are the key to price direction Wednesday, a floor analyst said. If the funds come back in to the market as buyers corn will be higher, if not, the market should set back, he added.

 

On Tuesday, strong fund buying helped push corn prices to levels not seen since the fall with March corn moving through resistance at several price levels on technical charts.

 

Open interest increased over 26,000 contracts in Tuesday's trading session according to the preliminary volume and open interest reports released by the CBOT. Several analysts noted that recent fund activity could be from commodity index funds which tend to buy futures and then hold them as part of their portfolios.

 

The market is also following the weather in Argentina, which is a major competitor of the U.S. Hot and mostly dry weather is expected through the next six or seven days with temperatures reaching into the upper 90's and low 100 degrees Fahrenheit, DTN Meteorlogix weather said. The expected dry weather could negatively impact the crop, which would be bullish for prices.

 

Outside markets are mixed Wednesday morning. Precious metals are higher, but crude oil futures were lower.

 

Cash corn basis bids were unchanged to mostly lower Wednesday. Central Illinois was unchanged at 3 cents over the March, with St. Louis 5 cents higher at 2 cents over the March.

 

On daily price charts there is solid evidence that a low is in place for March futures, a market technician said. The next upside objective for the bulls is to push prices above a big downside gap on the daily bar chart, meaning a move above USUS$2.27. First resistance in March corn is pegged at USUS$2.21, Tuesday's high and then at USUS$2.22 1/2. First support is pegged at USUS$2.18 and then at USUS$2.15 1/2, Tuesday's low.

 

In other corn news, corn prices were higher in China in the week ended Wednesday as state-owned purchasing companies built inventories on ideas that prices will move higher in the short term, analysts said.

 

Taiwan's Member Feed Industry Group is seeking to purchase up to 60,000 metric tonnes of U.S. origin corn in a tender to be concluded Friday, a Taipei-based trader said Wednesday.

 

Corn futures traded on China's Dalian Futures Exchange finished higher Wednesday with the most active September contract gaining RMB23, ending at RMB1,391/tonne.