January 30, 2007

 

CBOT Corn Outlook on Tuesday: Down 1-2 cents; consolidating, lacks fresh inputs

 

 

Corn futures on the Chicago Board of Trade are expected to start Tuesday's day session posting modest declines, in unison with the overnight theme, as technical factors remain featured amid a quiet news front.

 

Analysts expect corn to open 1 to 2 cents lower.

 

In overnight electronic trading, March corn ended 2 1/4 cents lower at US$3.97 3/4, May corn finished 2 cents lower at US$4.09 1/2, and December corn was 1 3/4-cent lower at US$3.92 1/2.

 

In the absence of fresh news to stimulate activity, the market is poised to continue its consolidation phase with charts beneath the market seen as near term objectives, analysts said.

 

Light long liquidation pressure is seen continuing to weigh on markets, as the bullish momentum from the January crop report is seemingly factored into prices, a CBOT floor analyst said. The market needs fresh directives to generate upside movement, he added.

 

However, strong long range fundamental outlooks and scale down commercial buying surfacing on price breaks remain underpinning features, with bullish traders encouraged by the nearby contract's ability to settle at or above the key psychological US$4.00 per bushel level despite recent price weakness.

 

Light underlying support is seen from higher outside markets and outlooks for increased feed use as a cold wave grips the central U.S.

 

A technical analyst said recent price action has formed a fledgling downtrend channel on the March daily bar chart, but corn bulls still have the near-term technical advantage. No serious chart damage has occurred recently, as volatility has decreased a bit.

 

First resistance for March corn is seen at Monday's high of US$4.04 1/4 and then at US$4.08. First support is seen at Monday's low of US$3.96 and then at US$3.92.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were down 1-cent in Cedar Rapids, IA, up 5 cents in Peoria, Ill, and up 1-cent in St. Louis, MO.

 

The DTN Meteorlogix weather forecast said a drying trend continues for Argentina during the next 7 days with some hot weather possible at times. Some increasing stress to crops is expected. A few light showers may linger in the far north and east early Tuesday, before turning dry later. Mainly dry conditions are on tap for Wednesday and Thursday. Temperatures will average near to below normal Tuesday, near to above normal Wednesday, above normal Thursday.

 

Mainly dry conditions are expected Friday and Saturday. Temperatures will average above normal with highs ranging from the upper 80s to the upper 90s Fahrenheit, with hottest weather over southwest growing areas, Meteorlogix reports.

 

In other news, Ukraine's Economy Ministry has completed issuing grain export licenses within the export quotas for this year, Economy Minister Vladimir Makukha announced in a statement in Kiev Tuesday. Makukha said the ministry had issued 46 licenses to exporters totaling 390,000 metric tonnes of corn and 31 licenses totaling 516,000 tonnes of barley.

 

Meanwhile, corn buying in Asia has started 2007 on a weak note as high prices, steep ocean freight costs, sluggish feed demand and ample inventories keep traders on the sidelines. In Asia the three biggest buyers - Japan, Taiwan and South Korea - have mostly stocked up for the first quarter of the year and are in no rush to step up their imports for the next two months.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower, with the benchmark September contract settling down RMB6 at RMB1,700/tonne.