January 16, 2008

 

CBOT Corn Outlook on Wednesday: Down 3-4 cents on outside market weakness

 

 

Chicago Board of Trade corn futures are expected to begin day time trading 3-to-4 cents lower Wednesday, as weaker worldwide equity markets and lower prices in overnight trading are expected to pressure prices, analysts said.

 

In overnight electronic trading, March corn fell 3 3/4 cents to US$5.05 1/4 per bushel. Electronic trading volume in March was 7,264 contracts.

 

The market was lower in overnight trade on profit taking as well as sharply lower equity markets in Asia and that should depress prices at the opening, a commission house analyst said. Concerns are that if a world economic slowdown occurs, it would weaken demand for commodities, the analyst said.

 

In addition, China officially imposed price controls on food grains overnight and that is psychologically negative to commodities, the analyst said.

 

Sharply lower precious metal futures and weaker crude oil values are also expected to weigh on prices, an analyst said. Gold is down more than US$10.00 per ounce and silver is trading more than 20 cents lower.

 

Improving weather in Argentina's grain growing areas is also expected to be a negative influence on prices, a trader said.

 

Widely scattered thunderstorms were reported in Argentina during the last 24-hour period and thunderstorms may linger Wednesday and redevelop Thursday, DTN Meteorlogix Weather said. Mostly dry weather is expected from Friday through Sunday with temperatures above-normal west and near-to-below normal east Saturday. Near-to-above normal readings are expected Sunday, Meteorlogix Weather said.

 

On daily technical charts March corn traded higher and hit a fresh contract and 12-year high before backing off to close lower and had a bearish "outside day" down on the daily bar chart, a technical analyst said. Strong selling Wednesday would confirm a bearish "key reversal" down which would be an early technical clue that a near-term top is in place, the analyst said. The bulls next major upside objective remains pushing and closing 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.

 

In other corn news, cash corn prices in China were mostly stable in the week to Wednesday on continued government auctions.

 

China sold 27,483 metric tonnes of corn from its state reserves Tuesday, and has sold 17% of the 3 million tonnes it planned to sell.

 

Turkey has issued a tender to purchase 125,000 metric tonnes of corn, the country's grain board said Wednesday.

 

Corn futures on China's Dalian Commodities Exchange settled down with the benchmark Sept. contract RMB/26 lower at 1,797RMB/tonne.