January 15, 2008

 

CBOT Corn Outlook on Tuesday: 1-2 cents lower as market seen consolidating

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 1-to-2 cents lower Tuesday, as consolidation and light profit taking is expected to weigh on prices at the opening, analysts said.

 

In overnight electronic trading, March corn slipped 2 1/2 cents to US$5.09 1/2 per bushel.

 

Corn was weaker overnight and should open to the downside as people are expected to consolidate their positions, a commission house analyst said. The reasons for the recent strong rally remain in place, but it looks like some participants might take some profits after the 37 cent rally in the last two days, the analyst said.

 

The market could see two-sided trade, but it will depend on what the speculative money wants to do, a trader said. The outside markets are mixed so corn looks lower to start and then see what develops, the trader said. The market will also be watching the weather in Argentina where it looks to be drier than what forecasts has been expecting earlier in the week, the trader added.

 

An upper level ridge currently centered over northern Argentina is expected to weaken over the next several days and move off to the west which will allow a chance for scattered thunderstorms and cooler temperatures, DTN Meteorlogix Weather said. There is a chance for a few light showers with locally heavier thundershowers Tuesday night into Wednesday, with mainly dry weather forecast for Thursday. Temperatures will average above normal Tuesday but turn cooler Wednesday and Thursday, Meteorlogix Weather said.

 

On daily technical charts, March gapped open higher for the second straight session on the daily bar chart, hit a fresh contract and 12-year high and closely solidly higher after trading limit up. The bulls remain in strong technical command with no strong technical clues that a market top is close. However, recent chart action in corn could be a "blow-off-top" forming on the daily bar chart, with the market putting in a near-term top and then correcting, a technical analyst said. The bulls next major upside objective is to push and close prices above the all-time high of US$5.54 1/2, reached in 1996. The next downside objective for the bears is to push prices below solid support at US$5.00.

 

First resistance for March corn is seen at US$5.15, Monday's contract high and then at US$5.25. First support is seen at US$5.08, Monday's low and then at US$5.00.

 

In other corn news, Philippine corn production reached 6.73 million metric tonnes in 2007, up 10% on year, as rising prices encouraged a bigger planted area, the Philippine Department of Agriculture said Tuesday.

 

China sold 27,483 metric tonnes of corn from state reserves Tuesday, or 5.6% of the 491,009 tonnes it planned to sell, part of a plan to sell 3 million tonnes from state reserves.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark Sept. contract down RMB/19 at 1,823RMB/tonne.