February 14, 2007
CBOT Corn Outlook on Wednesday: Up 1-2 cents, e-CBOT, follow-through tech buys
Corn futures on the Chicago Board of Trade are seen starting Wednesday's day session on firm footing, taking its cue from price strength in overnight trade.
Analysts expect corn to open 1 to 2 cents higher.
In overnight electronic trading, March corn ended 2 1/2 cents higher at US$4.13 1/2, May corn finished 2 cents higher at US$4.25 1/4, and December corn was 1/4-cent higher at US$4.03 1/4.
Follow-through technical buying is expected to underpin futures in early trade, as the lack of fresh fundamental news continues to keep technical factors and outside markets influencing prices, analysts said.
Tuesday's strong technical close gave life to market bulls, with supportive long range fundamental outlooks keeping buyers in command of price direction, traders said.
A technical analyst said Tuesday's price action produced a fresh four-week high and the close near the session high basis March futures allowed bulls to regained fresh upside technical momentum. The next upside objective is to produce a close above the contract high of US$4.20 1/2. 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 Tuesday's high of US$4.11 1/2 and then at US$4.15. First support is seen at US$4.05 and then at this week's low of US$4.03.
However, traders will remain on guard for signs of upside exhaustion and will be ready to sell weakness in the absence of fresh fundamental news to justify higher price action, said a CBOT floor analyst.
Tuesday's price strength was a light volume rally, leaving some traders cautious, but with the market full of bullish sentiment buyers are ready to key in on any supportive data that may enter the market, the analyst added.
The U.S. Department of Agriculture will release new 10-year agricultural baseline projections at 12:00 p.m. EST. The new projections cover agricultural crop and livestock commodities, agricultural trade and aggregate indicators such as farm income and food prices through 2016. The projections do not represent a USDA forecast, but a conditional, long-run scenario based on specific assumptions about farm policy, the weather, the economy and international developments.
The DTN Meteorlogix Weather Service forecast said blowing snow and very cold weather will continue to hamper operations on the Illinois River during Wednesday. Very cold weather will continue Thursday, with temperatures not so cold Friday.
Moderate to heavy thunderstorms appear likely during the next few days in Argentina's crop belt. This should maintain moisture for most crops. Dry weather in South Africa's western belt should continue for the next 7 days. Stress to maize will increase again, after the weekend moisture is quickly depleted, Meteorlogix reports.
U.S. Midwest cash corn basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash corn bids were up 3 cents in Cedar Rapids, IA., up 2 cents in Evansville, Ind, and up 3 cents in St. Louis MO.
In other news, the Philippine Department of Agriculture has approved a request made by the poultry, livestock and feedmill industries to bring in 400,000 metric tonnes of corn at zero duty, an industry executive said Wednesday. Members of the poultry, livestock and feedmill industries earlier asked the government for permission to buy up to 700,000 tonnes of yellow corn at zero duty.
Meanwhile, China's corn prices in major producing regions were slightly lower in the week ended Wednesday, as many processing plants stopped buying because they have large amounts of stocks in hand, analysts said.
In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled mixed, with the benchmark September corn contract unchanged at RMB1,699/tonne. Corn futures were pressured by sluggish cash prices, which have been falling for the past two weeks on thin demand and supply ahead of the Lunar New Year, traders said.
