January 23, 2007

 

CBOT Corn Outlook on Tuesday: Up 4-5 cents; e-CBOT, supportive outlooks

 

 

Chicago Board of Trade corn futures are called to open Tuesday's day session on firm footing, following the lead of overnight price action with outlooks for supportive comments on biofuels in the State of the Union address Tuesday evening providing bullish sentiment.

 

Analysts expect corn to open 4 to 5 cents higher.

 

In overnight electronic trading, March corn ended 5 1/4 cents higher at US$4.09 1/2 and May corn finished 4 cents higher at US$4.20.

 

A quiet news front in keeping attention on the State of the Union address, with traders expecting bullish comments on the importance of ethanol and biofuels to the U.S.'s energy future, analysts said. Last year, President George W. Bush gave the market a jolt with bullish forecasts for ethanol and traders are bracing for another bullish statement that could inject positive momentum to prices in the absence of any other fresh fundamental news, analysts added.

 

Bush is expected to deliver his State of the Union address Tuesday evening 9:00 p.m. EST.

 

Meanwhile, technical activity will play a key role in the session's price movement, with traders and analysts impressed by the market's ability to hold above support levels in Monday's profit taking setback, a CBOT floor analyst said.

 

A market technician said bullish momentum is still in firm technical command of near term price direction. Prices have been pausing at higher levels, and that isn't seen as bearish. A bull flag or bullish pennant pattern could be forming on the daily bar chart. First resistance for March corn is seen at Monday's high of US$4.09 and then at US$4.15. First support is seen at Monday's low of US$4.01 and then at US$3.96 1/2.

 

Otherwise, the scarcity of fresh news will keep activity volatile in the near term, as any sign of exhausted buying in the absence of fresh bullish news could uncover profit taking pressure, while new crop futures should remain underpinned bullish long term demand prospects, a trader said.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were up 3 cents in Des Moines, Iowa, and up 3 cents in Peoria, Ill.

 

The DTN Meteorlogix weather forecast said scattered thundershowers again occurred in the drier areas of La Pampa and western Buenos Aires overnight. This should help to ease stress to crops after recent hot and dry weather.

 

Episodes of scattered to widely scattered showers and thunderstorms are on tap for Argentine crop areas through Thursday. Rainfall for the 72 hour period should average 0.50-1.00 inch and locally heavier with coverage of 50-70 percent. Temperatures will average near to above normal in the north, and near to below normal in the south. Thundershowers may linger in the north and east early Friday before turning drier. Mainly dry conditions are expected Saturday, with temperatures averaging near to above normal, Meteorlogix said.

 

In other news, Argentina is expected to produce a record 21 million metric tonnes of corn from the 2006-07 crop due to favorable weather conditions, Agriculture Secretariat Press Chief Monica Meda told Dow Jones Newswires on Monday.

 

In overseas markets, China's Corn futures traded on the Dalian Commodity Exchange settled mostly higher. The benchmark September 2007 corn contract rose RMB8 to settle at RMB1,723/tonne.