February 20, 2008

 

CBOT Corn Outlook on Wednesday: Flat to up 1 cent, position squaring expected

 

 

Chicago Board of Trade corn futures are predicted to start day session trading unchanged to 1 cent higher, based on light gains posted in overnight trade, though the market could see some position squaring after recent price strength, an analyst said.

 

In overnight electronic trading, May corn gained 1/2 cent to US$5.33 per bushel and December gained 3/4 cent to US$5.45 3/4. Electronic trading volume was 3,860 May contracts.

 

Corn was slightly higher overnight and that should support prices at the opening, an analyst said. However, all the factors that helped corn rally Tuesday are not present Wednesday. Crude oil and gold are down, the U.S. dollar is higher and soybeans are weaker, which should all limit the upside in corn, the analyst said.

 

The market has seen good gains recently and could see some consolidation as corn lacks fresh fundamental news, a commission house analyst said. Some participants might want to even up their positions ahead of the U.S. Department of Agriculture Outlook Forum which begins Thursday, the commission house analyst added.

 

The weather in South America has been pretty good for crop development recently and is beginning to recede in importance as the crop moves towards maturity. However, the trade needs watch for any adverse weather which could cause problems for the crop.

 

In Argentina, episodes of thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops, DTN Meteorlogix Weather said. Mostly dry weather is forecast Thursday with dry weather with only a few showers in the west and north on Friday. Temperatures are expected to average near-to-above normal Thursday and Friday.

 

On daily technical charts, July corn gapped higher Tuesday and closed at a new contract high close on speculative buying and stronger "outside markets," a technical analyst said. The next upside price objective for market bulls is to push and close prices above solid resistance at US$5.51 1/4 per bushel, the contract high. The next downside price objective is to push 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$5.48 and then at US$5.51 1/4. First support is seen at Tuesday's low of US$5.39 1/2, and then at US$5.35.

 

In other corn news, cash corn prices in China were stable in the week ended Wednesday as trading remained light following the recent holiday.

 

China sold 140,737 metric tonnes of corn from state reserves Tuesday, 28.1% of the 500,051 tonnes it planned to sell, according to data from the National Grain and Oil Trade Center. Including this sale, the government has sold 752,167 tonnes of corn from state reserves as pat of its planned sale of 4.5 million tonnes.

 

Corn futures on China's Dalian Commodity Exchange settled unchanged with the September contract at 1,810RMB/tonne.