March 14, 2007

 

CBOT Corn Outlook on Wednesday: 3-4 cents lower on weak equities, technicals

 

 

Chicago Board of Trade corn futures are forecast to begin trading 3-to-4 cents lower Wednesday as weaker equity markets overnight and follow through technical selling are expected to weigh on the market at the opening, analysts said.

 

In overnight electronic trading, May corn fell 4 3/4 cents to US$4.02 per bushel and July also ended 4 3/4 cents lower to US$4.13. E-CBOT volume in May was 5,513 contracts.

 

The stock markets overseas were lower overnight and that nervousness in the equities markets is expected to pressure commodities, a CBOT floor analyst said. Precious metals are lower and technically the corn market is weak and it could see follow through selling after Tuesday's losses and the weakness in overnight trading, he added.

 

The funds have been active sellers in the past several sessions and if they continue to liquidate their long positions the market will remain under pressure, a commission house analyst said.

 

On daily open auction technical charts, CBOT May corn reached another five-week low on daily technical charts and some near-term chart damage has occurred, a market technician said.

 

The bulls' next upside price objective is closing prices above solid chart resistance at US$4.20 per bushel, while the bears' next target is closing prices below support at US$4.00.

 

First resistance is seen at US$4.12 1/2 and then at US$4.18 1/2. First support is seen at Tuesday's low of US$4.02 and then at US$4.00.

 

In the U.S. Midwest there is a chance for light precipitation Thursday with dry weather expected Friday in western areas of the region, DTN Meteorologix Weather said. Periods of showers are forecast for the eastern half of the region on both Thursday and Friday with amounts of .30-1.00 inch and locally heavier.

 

Temperatures are expected to average near-to-below Thursday and near normal Friday west and above normal Thursday and near-to-below normal east on Friday, Meteorologix Weather said.

 

Deliveries posted against the March future were 211 contracts Wednesday. Large issuers included the customer account of the Combs division of Cunningham Commodities, which issued 71 contracts, and Cunningham Commodities, which issued 87 contracts.

 

Large stoppers included the customer account of the Astro Division of UBS Securities, which stopped 185 contracts. The last trade assigned was March 12. Preliminary open interest in March is 660 contracts.

 

In other corn news, Taiwan's Members Feed Industry Group purchased 60,000 metric tonnes of U.S. corn in a tender concluded Wednesday, an official with the group said.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the most active September contract up RMB2 at RMB1,692/tonne.