February 1, 2006

CBOT Corn Outlook on Wednesday: Down 2-3 cents, following e-CBOT, soybeans

 

 

Corn futures at the Chicago Board of Trade are predicted to open 2-3 cents lower Wednesday, reflecting price weakness in overnight trade and lower soybean values, floor sources said.

 

In overnight e-CBOT trading, March corn fell 2 1/4 cents to US$2.16 1/2 per bushel, May corn declined 2 1/2 cents to US$2.26 1/2 and July corn slipped 1 3/4 cents to US$2.36 1/4.

 

The market will start out on the defensive, a commission house analyst said. Corn was lower overnight on forecasts for rain over the weekend in Argentina which pushed soybeans lower and weighed on corn as well, he added.

 

Corn should start out lower, but it's a new month and if the funds have new money, the market could draw some support from that, a floor analyst said. The fundamentals remain negative and if the funds do not support it, the market could return to focus on the fundamentals, he added.

 

Analysts attribute recent price strength in corn to strong interest from commodity funds and passive commodity index funds which buy and hold futures contracts, as investors seek to diversify their assets.

 

Comments made by President Bush regarding America's need to increase efforts to develop energy alternatives to oil should have little impact, with one analyst noting "the President talked more about renewable fuels from garbage and grass than ethanol or biodiesel"

 

Periods of scattered showers and thunderstorms are expected through early Saturday in Argentina with rainfall expected as high as 1.5 inches with heavier amounts possible, DTN Meteorlogix weather said. Temperatures are expected near to below normal south and above normal north in the next several days, with below normal temperatures forecast for the weekend, Meteorlogix said.

 

Cash corn basis bids were mixed Wednesday morning. Central Illinois was unchanged at 3 cents over the March; with St. Louis unchanged at 4 cents over the March future.

 

On technical charts, a close below US$2.13 would provide bears with fresh downside technical momentum, a market technician said. First resistance for March corn is pegged at US$2.19 1/4, Tuesday's high, and then at US$2.21. First support is pegged at US$2.16, Tuesday's low and then at US$2.15.

 

According to preliminary volume and open interest data released by the CBOT, corn open interest set another record on Tuesday, with open interest up 18,988 contracts to 976,870 contracts.

 

In China, the Dalian futures exchange is closed this week due to the Lunar New Year holiday. Trading will resume on Feb. 6.