February 27, 2008

 

CBOT Corn Outlook on Wednesday: Down 10-15 cents, overnight weakness, spillover

 

 

Corn futures at the Chicago Board of Trade are poised for a lower start to Wednesday's day session, taking its cue from overnight trade and weakness in neighboring grains.

 

Analysts expect corn to open 10 to 15 cents lower.

 

In overnight electronic trading, March corn was 12 1/2 cents lower at US$5.18, May corn was 12 1/2 cents lower at US$5.31 1/2, July corn was 13 cents lower at US$5.43 1/4, and December corn was 11 3/4 cents lower at US$5.44 3/4.

 

A quiet news front is expected to keep futures on the defensive, with carryover momentum from Tuesday's declines weighing on prices, analysts said.

 

Spillover pressure from sharp overnight losses in wheat and soybean futures are seen weighing on prices as well, as traders continue to look to outside markets for support in the absence of fresh fundamental news to drive corn, analysts added.

 

Ample nearby supplies do not present the same sensitivity that wheat and soybeans have in regards to price breaks, as corn does not have the urgency of end-users to rush in and cover needs on breaks, a CBOT floor analyst said.

 

Nevertheless, bullish long range fundamental outlooks and lingering inflationary concerns should limit setbacks, with traders looking to even a few positions heading into months end, he added.

 

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 next upside price objective is to push and close July corn above solid resistance at the contract high of US$5.66 3/4. The next downside price objective is to push and close prices below solid support at Tuesday's low of US$5.42.

 

First resistance for July corn is seen at Tuesday's high of US$5.58 3/4 and then at US$5.66 3/4. First support is seen at US$5.50 and then at US$5.42.

 

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

 

China's cash corn prices were mostly stable in the northern producing regions in the week ended Wednesday, but fell in the non-producing regions due to decreased costs. Trading was light in northeast China's producing region as industrial processing plants stayed on the sidelines while feedmeal plants weren't actively buying, said traders. However, farmers increased their sales volume of corn as they need money for spring planting.