February 6, 2007

 

CBOT Corn Outlook on Tuesday: Up 1-2 cents; e-CBOT theme; quiet news front

 

 

Corn futures at the Chicago Board of Trade are seen starting Tuesday's session modestly higher, taking their lead from the supportive theme in the overnight session.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 1/4-cent higher at US$4.03 1/4, May corn finished 1/2-cent higher at US$4.15, and December corn was 1 3/4-cent higher at US$3.96 3/4.

 

The market is poised for another range-bound session, with futures unable to launch a definitive move in either direction in the absence of fresh fundamental news, analysts said.

 

The market is seemingly in a waiting period, looking for some new inputs to break prices out of a trading range. Futures continue to filter through old information, providing little incentive for buyers to push values above the recent highs, traders said.

 

Meanwhile, underlying commercial buying and supportive long range outlooks are keeping a floor under prices. Higher energy prices are seen providing light support amid the lingering cold wave across the central U.S. Nevertheless, traders expect futures will flop around in sideways trade, awaiting new directives and Friday's supply and demand report. Technical factors will remain a feature as the market looks to satisfy near-term technical objectives, traders added.

 

A technical analyst said recent price action has formed a downtrend channel on the daily bar chart, but corn bulls still have the near-term technical advantage. The bullish theme would gain better upside technical momentum by producing a close above chart resistance at last week's high of US$4.09 1/4 basis March futures. The next downside price objective is producing a close below solid chart support at US$3.92.

 

First resistance for March corn is seen at Monday's high of US$4.04 1/2 and then at US$4.08. First support is seen at Monday's low of US$3.97 3/4 and then at last week's low of US$3.95.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were up 5 cents in Evansville, Ind., up 2 cents in Des Moines, Iowa, and up 8 cents in St. Louis, Mo.

 

The DTN Meteorlogix weather forecast said snow during Tuesday may cause some minor transportation concerns in the western U.S. Midwest. Another cold morning is greeting the eastern Midwest, but no colder than Monday. There is another cold high expected within the five-day period but this one does not look as cold as the current one. The six- to 10-day period should feature less cold and more precipitation chances, Meteorlogix forecasts.

 

In Argentina, dry and warm to hot weather continues to stress crops in La Pampa and southern Buenos Aires. The long range charts suggest a chance for thunderstorms next Monday into Tuesday but this is somewhat uncertain.

 

Meanwhile, of 837,000 metric tonnes of grain currently accumulated in storage facilities at Ukraine's sea ports, 300,000 tonnes is in a critical state and a further 79,000 tonnes is in an unsatisfactory state, the press service of the agriculture ministry said Tuesday.

 

U.S. pork producers are exploring various feed alternatives and methods to enhance efficiencies to counteract the sharply rising corn prices caused by the competition between ethanol manufacturers and the livestock industry.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled mostly lower. The September contract fell RMB4 to RMB1,713/tonne.