March 12, 2008

 

CBOT Corn Outlook Wednesday: Down 3-5 cents following overnight weakness

 

 

Chicago Board of Trade corn futures are predicted to start trading 3 to 5 cents lower Wednesday, following the tone established overnight with little fresh news to support prices at the start, analysts said.

 

In overnight electronic trading ahead of the report, May corn declined 4 1/4 cents to US$5.68 1/4 per bushel and December dropped 5 cents to US$5.80 1/2. Electronic trading volume in May was over 10,000 contracts.

 

Corn was lower overnight on overseas weakness and should start out on the defensive, an analyst said. The market was supported by firm wheat prices in Tuesday's session and could garner some strength if wheat trades higher, the analyst said.

 

Price direction will depend on what speculative participants do, a trader said. Market fundamentals haven't changed but people remain interested in owning commodities as a hedge against inflation and if crude oil prices rally, corn should benefit, the trader said.

 

Trading in corn will be choppy, a commission house analyst said. The move to new contract highs after Monday's price weakness is supportive technically, but trading could be two-sided and depends on the "outside" commodity markets as well as the direction of the equity markets, the commission house analyst said.

 

On daily technical charts, July corn ended higher Tuesday and hit a fresh contract and all-time high. Corn bulls still have the near-term technical advantage and their next upside price objective remains pushing and closing prices above major psychological resistance at US$6.00 per bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid support at last week's low of US$5.58 1/4.

 

First resistance for July corn is seen at US$5.91, Tuesday's contract high and then at US$5.95. First support is seen at US$5.73, Tuesday's low and then at US$5.66 3/4.

 

Deliveries posted against the Chicago Board of Trade March corn future were 561 contracts Wednesday. Large issuers included the customer account of JP Morgan which issued 243 contracts and the customer account of RJ O'Brien, which issued 198 contracts. Stoppers included the customer account of JP Morgan which stopped 396 contracts and the customer account of the Astro division of UBS which stopped 165 contracts. The last trade assigned was Mar 4.

 

In other corn news, India has no immediate plans to ban corn exports, the country's Junior Commerce and Industry Minister said, despite concerns voiced by the poultry industry over high domestic corn prices. India's corn exports are expected to increase 500,000 metric tonnes in the current marketing year that began in October to 1 million tonnes due to increased production and good overseas prices, Indian traders said.

 

Cash corn prices in China were near unchanged in the week ended Wednesday on stable supplies. China sold over 39,000 metric tonnes of corn from state reserves Tuesday and has now sold 878,770 tonnes from state reserves since December, 15.1% of the 5.83 million tonnes it plans to sell.

 

Corn futures on China's Dalian Commodity Exchange settled lower with the September contract down RMB/13 at 1,821 RMB/tonne.