March 18, 2008

 

CBOT Corn Outlook on Tuesday: Down 3-5 cents; overnight theme; economic jitters

 

 

Corn futures on the Chicago Board of Trade are expected to start Tuesday's day session lower, in tune with overnight price action as lingering economic uncertainties continue to apply pressure to prices.

 

Analysts expect corn to open 3 to 5 cents lower.

 

In overnight electronic trading, May corn was 4 1/4 cents lower at US$5.35, July corn was 4 cents lower at US$5.47 1/4, and December corn was 5 1/2 cents lower at US$5.49 1/2.

 

Economic jitters remain a hindrance to upside price movement, as traders take a close look at risk management with a flight to liquidity seen as a viable alternative to holding risky positions in tightening lending scenario, analysts said.

 

Spillover weakness from soybeans is seen adding some pressure to prices, but an early bounce in crude oil and gold futures coupled with the ability of soybeans to climb off its limit down losses overnight is seen providing some optimism that downside pressure could be curtailed, a CBOT floor analyst said.

 

Meanwhile, the trade is expected take a cautious approach as they await the U.S. Federal Reserves decision on interest rates, which is widely expected to produce another interest rate cut, analysts added.

 

The Federal Reserve is expected to release its interest rate decision near 2:15 p.m. EDT Tuesday.

 

A technical analyst said Monday's price action combined with Friday's bearish weekly low close has spooked market bulls. Strong follow-through selling pressure on Tuesday or Wednesday would likely produce some serious near-term chart damage, he adds.

 

The next upside price objective for July corn is to push and close prices above solid technical resistance at US$5.80. The next downside price objective is to push and close prices below solid support at the March low of US$5.39. First resistance for July corn is seen at US$5.55 and then at US$5.60. First support is seen at US$5.50 and then at US$5.45.

 

In other news, India's corn exports are expected to top 1.5 million metric tonnes in the crop year ending June 30, up from 500,000 tonnes in the previous year, the Economic Times reported Tuesday. Lower freight rates compared with other exporting countries and estimated record production is expected to boost exports from the country, the newspaper reports.

 

China's soybean acreage in the major producing regions is likely to increase significantly in 2008, while corn acreage may fall as a result, local media said Tuesday, citing National Bureau of Statistics data. Corn acreage in Heilongjiang province may fall 13.3% on year to 3.5 million hectares and move up slightly by 0.2% on year to 2.86 million hectares in Jilin province, the report said, citing the statistics bureau's most recent survey.