January 30, 2008

 

CBOT Corn Outlook on Wednesday: 1-2 cents lower on weaker wheat, lacks fresh news

 

 

Chicago Board of Trade corn futures are predicted to start day time trading 1-to-2 cents lower Wednesday, undermined by overnight losses in wheat along with the absence of fresh fundamental news, analysts said.

 

In overnight electronic trading, March corn slipped 1/2 cent to US$5.00 1/2 per bushel and December also fell 1/2 cent to US$5.10 1/4. Electronic trading volume in March was above 5,517 contracts.

 

The market has been supported by the recent rally in wheat futures and with wheat trading lower overnight, corn should start trade on the defensive, an analyst said. Price direction will also be determined by what occurs in the outside markets of energy and metals which are mixed, the analyst added.

 

CBOT March wheat ended the overnight session down 4 3/4 cents at US$9.39 1/4 per bushel.

 

Corn should trade within tight ranges as the lack of fresh news will limit volatility, a trader said. The recent volatility in the equity markets has spilled into commodities and with the Fed meeting Wednesday on interest rates, trading will likely be subdued with any announcement on rates due out after the close, the trader added. In addition, there doesn't appear to be any major weather issues in South America which should dampen price volatility as well, the trader said.

 

In Argentina, dry weather with only a few light showers are expected Thursday with mostly dry weather expected through Monday, DTN Meteorlogix Weather said. Temperatures are expected to average near-to-below normal early in the period and near-to-above normal later in the period through Monday, Meteorlogix Weather said.

 

On daily technical charts, March corn closed weaker and near mid-range. Corn will continue to follow wheat as well as the "outside" markets gold, crude oil and the U.S. dollar, a technical analyst said. Corn bulls continue to have upside near-term technical momentum. 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 remains settling prices below solid support at US$4.80 per bushel.

 

First resistance for March corn is seen at US$5.06 3/4, Tuesday's high and then at US$5.10. First support is seen at US$4.97 and then at US$4.93 1/2.

 

In other corn news, cash corn prices in China were mixed in the week ended Wednesday, lower in northern producing areas but higher in the south due to poor weather.

 

Corn futures on China's Dalian Commodities Exchange settled slightly higher with the benchmark Sept. contract up RMB/4 at 1,749RMB/tonne.