March 4, 2008

 

CBOT Corn Outlook on Tuesday: 3-5 cents lower on overnight retreat, weak soy

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 3 to 5 cents lower Tuesday, dragged down by weaker prices overnight and lower soybean values, an analyst said.

 

In overnight electronic trading, May corn declined 4 1/4 cents to US$5.62 1/4 per bushel and December slipped 2 1/2 cents to US$5.73 3/4. Electronic trading volume in May was over 20,000 contracts.

 

The market should start on the defensive following weakness in the overnight session, an analyst said. Oilseed futures in China sold off sharply and that impacted the CBOT soy complex, and corn followed soybeans lower, the analyst said.

 

In China, market chatter that the government might sell vegetable oils from state reserves and cut import tariffs to curb surging prices pushed most overseas futures prices lower.

 

Soybeans are the leader, and corn is following what happens to soybean prices, a trader said. However, crude oil is higher and that could act as support given concerns about inflation, the trader said.

 

Although some participants are expecting a "turnaround Tuesday" type of session, Monday's new all-time high close should continue to encourage commodity fund buying, said Brian Hoops, president of Midwest Market Solutions in a note to clients Tuesday.

 

On daily technical charts, July corn gapped open higher Monday and hit a fresh contract high and all-time high. Fresh speculative buying and stronger "outside" markets helped boost corn prices Monday, a technical analyst said. Market bulls gained more power Monday and still have the near-term technical strength, the analyst said. The next upside price objective is to close prices above resistance at Monday's high of US$5.84 1/2. The bear's downside price objective is to close prices below support at US$5.71, which would fill on the downside Monday's upside price gap on the daily chart.

 

First resistance for July corn is seen at US$5.84 1/2, Monday's contract high and then at US$5.90. First support is seen at Friday's low of US$5.63 3/4 and then at US$5.58 1/4. First support is seen at US$5.76, Monday's low and then at US$5.71.

 

Deliveries posted against the Chicago Board of Trade March future were 252 contracts Tuesday. Large issuers included the customer account of MF Global which issued 82 contracts, and the customer account of Tenco, which issued 58 contracts. Large stoppers included the house account of Tenco, which stopped 135 contracts and the customer account of Cunningham Commodities which stopped 93 contracts. The last trade assigned was Feb. 25.

 

In other corn news, corn futures on China's Dalian Commodity Exchange ended higher with the September contract up RMB13 at 1,869 RMB/tonne.