March 5, 2008

 

CBOT Corn Outlook on Wednesday: 4-6 cents higher on overnight gains, spillover

 

 

Chicago Board of Trade corn futures are predicted to start trading 4 to 6 cents higher Wednesday, buoyed by an overnight rebound and an expected higher start in soybeans and wheat, analysts said.

 

In overnight electronic trading, May corn rose 6 1/2 cents to US$5.61 per bushel and December gained 6 1/2 cents to US$5.73 3/4. Electronic trading volume in May was over 13,000 contracts.

 

Corn will be supported by the gains in the overnight session and by short covering after Tuesday's losses, a commission house analyst said. In addition, the "outside" inflationary markets have recovered and are trading higher which should provide underlying support.

 

Corn might also see some strength on overnight news from China, an analyst said. Overnight China announced that it would sharply limit grain exports this year in an attempt to ease inflationary pressures and this should underpin the market, said Vic Lespinasse, an analyst at Illinois Grain.

 

An expected stronger start in soybeans and wheat will also underpin corn, a trader said. Soybeans and wheat had double digit gains overnight and are expected to open day session trading firm and that could buoy corn prices, the trader said.

 

On daily technical charts, July corn closed lower and nearer the session low on profit-taking pressure, a technical analyst said. No chart damage occurred but follow through selling Wednesday would "begin to spook the bulls a bit," the analyst said. Corn bulls still have the technical advantage and their next upside price objective is to push and close prices above resistance at the contract high of US$5.84 1/2. The next downside price objective is to close prices below solid support at US$5.51 1/4.

 

First resistance for July corn is seen at US$5.71 and then at US$5.76. First support is seen at US$5.58 1/4, Tuesday's low and then at US$5.51 1/4.

 

Deliveries posted against the Chicago Board of Trade March future were 256 contracts Wednesday. Large issuers included the house account of Tenco which issued 135 contracts, and the customer account of Cunningham, which issued 93 contracts. The house account of Tenco stopped all 256 contracts issued. The last trade assigned was Feb. 25.

 

In other corn news, cash corn prices in China were stable in the week ended Wednesday as ample supplies are available with continued government sales of corn helping prices remain steady.

 

Corn futures on China's Dalian Commodity Exchange settled lower with the September contract down RMB/17 at 1,852 RMB/tonne.