January 8, 2008

 

CBOT Corn Outlook on Tuesday: 4-5 cents higher, driven by outside market gains

 

 

Chicago Board of Trade corn futures are expected to begin day time trading 4-to-6 cents higher Tuesday, following strong gains in outside markets and higher prices established in overnight activity.

 

In overnight electronic trading, March corn rose 4 3/4 cents to US$4.71 per bushel, a new life of contract high. Volume in March was 4,713 contracts.

 

Corn should be supported by speculative buying, a commission house analyst said. "It's all about the money flow," with speculative traders pushing prices up overnight and expected to continue to buy in day session trading, the analyst said.

 

Energy and precious metals are higher and should provide support to corn, a trader said. Some people exited the market Monday but it appears to be a "turnaround Tuesday" type of day, the trader said. Talk that commodity index funds will rebalance their positions, adding more corn to their indices is limiting selling interest. In addition, some people expect a friendly crop production report on Friday, which is also trimming selling interest, the trader added.

 

The weather in Argentina has also turned somewhat drier according to updated forecasts, which should add to the supportive tone, an analyst said.

 

Dry conditions with only a few light showers are expected through Wednesday in Argentina, DTN Meteorlogix Weather said. Scattered showers and thunderstorms with amounts of 0.25-to-1.00 inch with locally heavier amounts are possible on Thursday. Temperatures are forecast above normal through Wednesday with highs in the 90 degrees Fahrenheit range before turning cooler to near-to-below normal Thursday and Friday, Meteorlogix Weather said.

 

On daily technical charts, March corn closed lower but nearer the session high. The market is pausing at higher levels but that pause is not bearish, a technical analyst said. An 11-week old uptrend is still in place on the daily bar chart. The next upside price objective is to push and close prices above solid resistance at US$4.69 1/2 per bushel. The next downside objective is to push prices below solid support at US$4.56 3/4, to fill on the downside an upside price gap on the daily bar chart.

 

First resistance for March corn is seen at US$4.69 1/2, the contract high and then at US$4.75. First support is seen at Friday's low of US$4.60, and then at US$4.56 3/4.

 

In other corn news, China has sold 21,000 metric tonnes of corn from its state reserves. Including this sale, China has sold over 481,000 tonnes of corn from state reserves since last December, 19% of the 2.5 million tonnes it planned to sell.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract up RMB/6 at 1,700RMB/tonne.