January 29, 2008

CBOT Corn Outlook on Tuesday: 3-5 cents higher on overnight gains, wheat rally

Chicago Board of Trade corn futures are expected to begin day time trading 3-to-5 cents higher Tuesday, bolstered by higher prices overnight and spillover from strong wheat prices, analysts said. In overnight activity, MGE spring wheat futures were 30 cents higher, or limit up and established another new all-time high.

In overnight electronic trading, March corn gained 5 1/4 cents to US$5.07 1/2 per bushel and December rose 3 3/4 cents to US$5.14 1/4. Electronic trading volume in March was above 8,601 contracts.

Corn will be influenced by the strength in wheat as well as what happens in outside commodity markets, a commission house analyst said. Spring wheat futures rallied to new all-time highs last night and have jumped more than US$1.00 per bushel in the last four trading days. As a result CBOT wheat will be higher and that will underpin corn, the analyst said. CBOT March wheat ended the overnight session 13 1/2 cents higher at US$9.76 1/2 per bushel. Crude oil is higher but metals have turned lower which might act to limit the upside, the analyst added.

The market saw good buying interest in Monday's trade and could see some follow through buying Tuesday, a trader said. The recent weather in Argentina remains supportive to crop development and could act as a drag on upside momentum, the trader said.

In Argentina, scattered showers and cooler temperatures during the past week have helped ease stress to crops but more rain is needed to help improve prospects, DTN Meteorlogix Weather said. There is a chance for scattered showers and possible thundershowers for central and northern Buenos Aires and Santa Fe Tuesday. Drier weather with only a few light showers is possible through Friday. Temperatures are expected to average below normal in the period, Meteorlogix Weather said.

On daily technical charts, March corn closed near the session high Monday, able to bounce back and close prices above major psychological resistance at US$5.00 per bushel, a technical analyst said. Bulls have regained upside technical momentum and their next upside price objective is to push and close prices above major resistance at the contract high of US$5.19 per bushel. The next downside price objective is to settle prices below solid support at US$4.80 per bushel.

First resistance for March corn is seen at US$5.04 1/2, last week's high and then at US$5.10. First support is seen at US$5.00 and then at US$4.93 1/2.

In other corn news, China sold 59,000 metric tonnes of corn from state reserves Tuesday, the National Grain & Oil Trade Center said. Including this sale the government has sold 611,430 tonnes of corn from its state reserves since December, or 15.3% of its planned 4-million-tonne sale to stabilize domestic feedmeal prices.

Corn futures on China's Dalian Commodities Exchange settled near unchanged with the benchmark Sept. contract up RMB/1 at 1,745RMB/tonne.