February 19, 2008

 

CBOT Corn Outlook on Tuesday: 4-6 cents higher on spillover from wheat, soy

 

 

Chicago Board of Trade corn futures are expected to begin trading 4 to 6 cents higher Tuesday, underpinned by spillover strength from the soy complex and wheat as well as a weaker U.S. dollar and follow through from the overnight session, analysts said.

 

In overnight electronic trading, March corn gained 5 3/4 cents to US$5.20 1/2 per bushel and December rose 6 cents to US$5.44. Electronic trading volume in March was 6,154 contracts.

 

The market will be higher, keying off the expected higher starts in both soybeans and nearby wheat, an analyst said. Soybeans are called to open 20 to 25 cents higher and CBOT wheat up 7 to 10 cents. Corn remains in the role of a follower of the other grains and should be well supported ahead of the U.S. Department of Agriculture's Outlook Forum set for Thursday and Friday, the analyst said.

 

In addition, corn could derive some additional support from surging crude oil prices and a weaker U.S. dollar, a trader said. Nearby crude oil is up over US$2.00 per barrel. Technically the market is strong and that should keep speculative interest high as well, the trader said.

 

In Argentina, after the possibility for a few more thundershowers in northern and eastern areas Tuesday, mainly dry weather is expected Wednesday and Thursday, DTN Meteorlogix Weather said. Temperatures are expected to average near-to-above normal Wednesday and above normal Thursday.

 

On daily technical charts, July corn closed higher Friday at a bullish weekly high close and at a fresh contract high close, a technical analyst said. Corn bulls continue to have strong upside technical momentum and their next upside price objective is to push and close prices above solid resistance a US$5.51 1/4 per bushel. The next downside objective price objective is pushing prices below solid support at US$5.21 1/2, which would fill on the downside a big upside price gap on the daily bar chart, the analyst said.

 

First resistance for July corn is seen at Friday's high of US$5.39 1/4 and then at US$5.42. First support is seen at Friday's low of US$5.33 1/4 and then at US$5.25 1/2.

 

In other corn news, China exported 30,000 metric tonnes of corn in January, down 97% from the same time last year, according to preliminary data Monday from the General Administration of Customs.

 

China sold 122,209 metric tonnes of corn from state reserves Tuesday, 24.4% of the 500,051 tonnes it planned to sell, the National Grain & Oil Trade Center said. Including this sale, the government has sold 733,639 tonnes of corn from its state reserves since December, or 16.3% of the 4.5-million tonnes it planned on selling to stabilize feed meal prices.

 

Corn futures on China's Dalian Commodity Exchange ended little changed with the September contract up RMB1 at 1,810RMB/tonne.