February 13, 2007

 

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

 

 

Chicago Board of Trade corn futures are seen starting Tuesday's day session modestly higher, taking its cue from overnight trade amid the absence of fresh fundamental news to lead prices.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 1/4-cent higher at US$4.06, May corn finished 1 3/4-cent higher at US$4.17 3/4, and December corn was 1 1/2-cent higher at US$4.00.

 

A quiet news front will once again keep technical factors and the influence of outside markets in play, with traders keeping an eye out for any signs of exhausted buying interest to reverse price direction, analysts said.

 

Crude oil and metals futures are trending higher in early Tuesday trade. The higher tone in outside markets may provide some underlying support to prices, said a CBOT commission house broker.

 

The squaring of positions and rolling of spreads are seen as features as well, with futures continuing to chop around in their recent trading ranges, awaiting fresh directives to pull buyers and sellers off the sidelines, traders said. Meanwhile, futures have seemingly found a comfort zone, with current prices reflecting the market's underlying fundamentals until actual acreage intentions are inputted into prices, traders added.

 

A technical analyst said a downtrend channel on the daily bar chart has been negated and market bulls have some fresh upside technical momentum. The market would gain better upside technical momentum by producing a close above solid chart resistance at US$4.10 basis March futures. The next downside price objective is producing a close below solid chart support at last week's low of US$3.91 1/2.

 

First resistance for March corn is seen at Monday's high of US$4.08 1/2 and then at US$4.10. First support is seen at Monday's low of US$4.03 and then at US$4.00.

 

The DTN Meteorlogix Weather Service forecast said the US and European models are in fair to good agreement during the next 10 days. This pattern features a strong upper level trough moving through the Great Lakes region and the northeast during the next few days with a secondary trough moving through the Midwest and northeast during days 4-7. This is a cold weather pattern for the Midwest and northeast during this 4-7 day period.

 

In Argentina, moderate to heavy thunderstorms appear likely by the end of this week. This should maintain moisture for most crops, Meteorlogix forecasts.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were down 2 cents in Cedar Rapids, Iowa, down 2 cents in Evansville, Ind, and down 6 cents in St. Louis, Mo.

 

In other news, China risks being overly dependent on corn imports to the detriment of local suppliers, an official at a government think tank wrote in an article published on an industry Web site. The corn industry is in danger of being controlled by foreign enterprises, as in the case of the soybean industry, wrote Jiang Changyun, a researcher at Industrial and Technological Economy Research Institute.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower, with the benchmark September corn contract settling RMB14 lower at RMB1,699/tonne.