February 26, 2008

 

CBOT Corn Outlook on Tuesday: Down 12-14 cents; correction after record highs

 

 

Chicago Board of Trade corn futures are poised for a lower start to Tuesday's day session, backpedaling on profit taking following Monday's run to new all-time highs.

 

Analysts expect corn to open 12 to 14 cents lower.

 

In overnight electronic trading, March corn was 13 1/4 cents lower at US$5.20, May corn was 14 cents lower at US$5.33, July corn was 13 3/4 cents lower at US$5.45, and December corn was 14 cents lower at US$5.43 1/4.

 

Overbought market conditions in the absence of fresh fundamental news is opening the door for traders to book some profits, as participants take a cautious approach with prices at historic highs, analysts said.

 

Corn futures' historic run to all-time highs Monday opens the door for volatile price action moving through the 2008 calendar year, with soybean and wheat price movement key directional influences.

 

However, the market continues to maintain bullish longer term outlooks with strong demand an underpinning feature, analysts add. Nevertheless, the market is set to take a breather from its upward push, but traders will remain on guard for downside exhaustion, particularly without a definitive influence from outside markets and spillover support from neighboring CBOT wheat futures, traders said.

 

A technical analyst said corn bulls still have solid upside near-term technical momentum, amid no strong technical clues of a market top being close at hand. The corn bulls' next upside price objective is to push and close July futures above solid resistance at Monday's contract high of US$5.66 3/4. The next downside price objective is to push prices below solid support at US$5.48 3/4, which would fill on the downside Monday's upside price gap on the daily bar chart.

 

First resistance for July corn is seen at Monday's contract high of US$5.66 3/4 and then at US$5.70. First support is seen at Monday's low of US$5.50 3/4 and then at US$5.48 3/4.

 

In other news, South Africa lifted its 2007-08 corn output 48.5% to 10.6 million metric tonnes from 7.1 million tonnes previously, making it the largest crop since 2004, official data showed Tuesday. An I-Net Bridge poll had expected the Department of Agriculture's Crop Estimates Committee to peg production at 11.2 million tonnes.

 

Four South Korean corn starch and sugar producers have recently signed a joint contract to import a total 50,000 metric tonnes of genetically-modified corn from the U.S. for food use, a report in the Chosun Ilbo newspaper said Tuesday. This would be the first time South Korean companies will import GMO corn for use in food, though such corn has been used for feed purposes in the past.

 

The DTN Meteorlogix Weather Service said periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops in Argentina.