January 22, 2007

 

CBOT Corn Outlook on Monday: Down 3-4 cents; e-CBOT, lack of fresh news

 

 

Chicago Board of Trade corn futures are seen starting Monday's day session on weaker footing, taking thier cue from the overnight theme in the absence of fresh supportive news to support prices.

 

Analysts expect corn to open 3 to 4 cents lower.

 

In overnight electronic trading, March corn ended 3 cents lower at US$4.03 3/4 and May corn finished 3 1/2 cents lower at US$4.20 3/4.

 

The market needs fresh bullish news to keep buyers energized, and with the technical outlook a bit suspect futures are vulnerable to profit taking liquidation pressure, said Don Roose, president U.S. Commodities in West Des Moines, IA.

 

Follow through selling from Friday's poor technical close is seen aiding the lower theme as traders take a cautious approach to bullish acreage projections at this point in the year, a CBOT floor trader said.

 

A technical analyst said even though March corn closed lower and near the session low, no technical chart damage occurred. "A bull flag or bullish pennant pattern may now be forming on the daily bar chart," the analyst said. Resistance for March corn is seen at US$4.10 and then at Friday's high of US$4.14 1/2. First support is seen at US$4.05 and then at US$4.00.

 

U.S. Department of Agriculture said private exporters reported the sale of 121,920 metric tonnes of corn to Japan for delivery during the 2006/2007 marketing year.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 368,755 combined corn futures and options contracts as of Jan 16, down from 405,639 the prior week. Traditional large speculative traders were net long 275,313 contracts compared to net longs of 212,214 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 560,206 contracts, up from the previous week's 502,661 contracts.

 

In other news, South American agricultural powers Argentina and Brazil joined Canada in a complaint against the U.S. over what they claim are illegal government handouts to U.S. corn growers, trade officials said Monday.

 

Under WTO rules, a three-month consultation period is required before a country can ask the trade body to launch a formal investigation.

 

Canadian corn acreage could grow as the lower-than-expected winter wheat area in Ontario last fall will likely result in more acres planted to corn this spring, according to a cereals specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs. Roughly 500,000 acres were planted to winter wheat in Ontario, short of expectations that ranged from 750,000 to 1.1 million acres. The specialist estimated that at least two-thirds of the area that was not seeded to winter wheat last fall will be seeded to corn this spring.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report 11:00 a.m. EST.

 

U.S. Midwest cash corn basis bids were mostly steady Monday, cash traders said. Spot U.S. cash corn bids were up 7 cents in Keokuk, IA, down 1 cent in Evansville, Ind., and up 7 cents in St Louis, MO.

 

The DTN Meteorlogix weather forecast said Argentine's crop areas of La Pampa and southwest Buenos Aires are too dry, increasing stress to corn. A few thundershowers were reported in the region during the weekend but more is still needed.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled lower as farmers cashed in ahead of the Spring Festival, which falls on Feb. 18 this year, analysts said. The September 2007 corn contract fell RMB16 to settle at RMB1,715/tonne.