February 6, 2008

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on surging wheat, overnight gains

 

 

Chicago Board of Trade corn futures are expected to start day session activity 2-to-4 cents higher Wednesday, as sharp gains in wheat prices and higher prices in overnight trading are expected to provide support at the opening, analysts said.

 

In overnight electronic trading, March corn gained 4 cents to US$5.13 1/4 per bushel and December rose 2 1/2 cents to US$5.35. Electronic trading volume in March was more than 17,000 contracts.

 

Wheat continues to lead the way higher and corn will trade higher in sympathy, a trader said. Wheat futures at all three U.S. exchanges ended the overnight session at limit up, or 30 cents higher with MGE spring wheat futures trading to US$14.93 per bushel, another new all-time high for any wheat futures contract.

 

Corn continues to gain from speculative buying, a commission house analyst said. Equity markets are weak and speculative investors are entering commodities with the grains a beneficiary of the move, the analyst said.

 

There is no fresh fundamental news out but the corn market is being driven by technical considerations, an analyst said. The charts continue to support ideas of higher prices, and both crude oil and metal futures are firm which are supportive to agricultural markets, the analyst said.

 

A more favorable weather pattern in Argentina's crop growing regions is forecast for the next several days.

 

In Argentina there appears to be a fair-to-good chance for significant thundershower activity during the end of this week and into the weekend, DTN Meteorlogix Weather said. A chance for scattered showers and thundershowers to develop Thursday and continuing into Friday for much of the region with rainfall potential 0.25-1.00 inch and locally heavier. Temperatures are predicted near-to-above-normal south and above normal north Thursday and Friday, Meteorlogix Weather said.

 

On daily technical charts, March corn closed lower but nearer the session high. Upside price movement was limited by the losses in crude oil and gold, but well supported by the continued rally in wheat futures, a technical analyst said. Corn will continue to be influenced by wheat and the "outside markets" as well as the U.S. dollar. The next upside price objective is to push and close prices above the contract high of US$5.19 per bushel. The next downside price objective remains closing prices below solid support at US$4.90.

 

First resistance for March corn is seen at Tuesday's high of US$5.11 1/4 and then at US$5.19. First support is seen at Tuesday's low of US$5.05 and then at US$5.00.

 

In other corn news, China's Dalian Commodities Exchange was closed due to the Lunar New Year holiday.

 

Tanzania is in the process of importing 300,000 metric tonnes of corn to offset a looming food shortage, the Guardian newspaper reported Wednesday, quoting Minister of State in the Prime Minister's office. Tanzania's corn production is around 2.4 million tonnes while consumption is estimated at 3 million tonnes a year.