January 31, 2007

 

CBOT Corn Outlook on Wednesday: Steady, mixed; e-CBOT, lacks fresh news

 

 

Chicago Board of Trade corn futures are seen starting Wednesday's day session with a steady to mixed undertone, taking its cue from overnight trade amid a lack of fresh fundamental news.

 

Analysts expect corn to open steady to mixed.

 

In overnight electronic trading, March corn ended 1/4-cent lower at US$4.04 1/2, May corn finished 1/4-cent lower at US$4.16, and December corn was 1/2-cent higher at US$3.98 1/4.

 

The market is poised for a mixed start, with end of the month positioning a feature amid the absence of directive influences on the market, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Tuesday, the market was buoyed by a bounce in crude oil futures, but with crude weaker in early action, it takes the bloom off the market this morning, Roose added.

 

In absence of fresh inputs, the market tends to look to outside markets for direction, a trader said. End of the month position squaring could tilt prices in either direction, he added.

 

Nevertheless, corn remains on firm footing technically, and the cold snap engulfing the central U.S. is seen giving support, as livestock feeders increase feed use. Otherwise, the market is looking for signs of demand rationing at current price levels, with scale down commercial buying seen underpinning prices as well, a CBOT floor analyst said.

 

A technical analyst said recent price action has formed a fledgling downtrend channel on the daily bar chart, but the corn bulls still have the near-term technical advantage. Corn bulls would gain better upside technical momentum by producing a close above chart resistance at US$4.10 basis the March future, while market bears' next downside price objective is producing a close below solid chart support at US$3.92, he said.

 

First resistance for March corn is seen at Tuesday's high of US$4.05 1/2 and then at US$4.08. First support is seen at US$4.00 and then at Tuesday's low of US$3.96.

 

In demand news, Taiwan's Members Feed Industry Group, or MFIG, has bought 60,000 metric tonnes of U.S. corn from trading house Cargill in a tender concluded Wednesday, a trader in Taipei said. The delivery is set between March 1-15 if shipped from U.S. Gulf, or March 16-30 if shipped from the Pacific Northwest.

 

U.S. Midwest cash corn basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash corn bids were up 7 cents in Cedar Rapids, Iowa, and down 5 cents in Peoria, Ill.

 

On tap for Wednesday, the U.S. Department of Agriculture is scheduled to release its 2007 Farm Bill proposals. The Energy Department is expected to release November ethanol production data.

 

The DTN Meteorlogix weather forecast said the U.S. and European models are in good agreement through the 10-day period. This is a cold or very cold pattern for the north plains, the entire Mississippi river valley and the northeast, but not as cold for the southwest plains. This pattern will also feature below-normal precipitation.

 

In Argentina's crop belt, a drying trend continues during the next 7 days with some hot weather possible at times. Some increasing stress to crops is expected, Meteorlogix reports.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled higher, with the benchmark September contract up RMB9 at RMB1,709/tonne. The market rallied in response to Tuesday's rebound in crude oil prices which supported corn and soyoil, analysts said.

 

Meanwhile, China's corn prices in major producing regions were mixed in the week to Wednesday. Analysts said the mixed tone was a result of farmers in the northeast region preferring to cash in ahead of the Spring Festival, while processing plants aren't eager to purchase as they have sufficient stocks.