February 20, 2007

 

CBOT Corn Outlook on Tuesday: Up 1-2 cents, e-CBOT, follow-through buying

 

 

Chicago Board of Trade corn futures are seen starting Tuesday's day session higher, taking its cue from overnight price action, with follow through buying from Friday's strong close an underpinning feature.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 3/4-cent higher at US$4.18 3/4, May corn finished 1 3/4-cent higher at US$4.31 1/4, and December corn was 1 3/4-cent higher at US$4.15.

 

Carryover buying from Friday's close should provide early strength to prices, with bullish technical momentum and underlying concerns surrounding potential 2007 acreage and weather a supportive force, analysts said.

 

Otherwise, fresh news remains scarce, with traders on guard for prices to backpedal lower if follow through speculative buying does not extend the opening gains, a CBOT floor trader said.

 

Meanwhile, a technical analyst said market bulls have solid upside technical momentum and gained more last week, amid fresh fund buying. The next major upside objective for May corn is to produce a close above strong technical resistance at US$4.50. The next downside price objective is producing a close below solid chart support at the February low of US$4.03 1/2.

 

First resistance for May corn is seen at the contract high of US$4.30 1/2 and then at US$4.35. First support is seen at US$4.25 and then at US$4.20.

 

The DTN Meteorlogix Weather Service forecast said the US and European models are fair to good agreement Tuesday. A strong upper level trough is seen moving through the western U.S. and into the plains later this week. This should lead to a strong upper low and surface storm over the Midwest by this weekend. This means strong winds, moderate to heavy precipitation and potentially even severe weather.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 344,527 combined corn futures and options contracts as of Feb. 13, up from 343,558 the prior week. Traditional large speculative traders were net long 304,534 contracts compared with net longs of 269,492 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 584,820 contracts, up from the previous week's 546,863 contracts.

 

On tap for Tuesday, the USDA is scheduled to release its weekly export inspection report at 11 a.m. EST.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were up 1-cent in Cedar Rapids, Iowa., up 5 cents in Central Ill, and up 1-cent in St. Louis, Mo.

 

In other news, the Philippines' Department of Agriculture is seriously considering a proposal to import up to 500,000 metric tonnes of corn at zero tariff, Agriculture Secretary Arthur Yap said Monday. The corn imports will have to come in between June and August, which is off-season for the domestic corn harvest, he said.

 

European Union environment ministers Tuesday upheld Hungary's right to ban a genetically modified strain of corn made by Monsanto Co. (MON), a European Commission spokeswoman said. A qualified majority of ministers voted against a commission proposal that would have forced Hungary to repeal its ban of MON810, an insect-resistant corn strain.