March 19, 2008

 

CBOT Corn Outlook on Wednesday: Down, overnights, soy weakness, outside markets

 

 

Chicago Board of Trade corn futures are poised for a lower start to Wednesday's day session, taking its cue from the overnight price theme, with spillover from soybeans and outside markets pressuring prices.

 

Analysts expect corn to open 8 to 12 cents lower.

 

In overnight electronic trading, May corn was 11 1/2 cents lower at US$5.35 3/4, July corn was 11 cents lower at US$5.48 1/4, and December corn was 13 1/4 cents lower at US$5.48.

 

Overnight price weakness is setting the stage for a defensive theme in early trade, with ideas Tuesday's recovery bounce was overdone in the absence of outside market support expected to rekindle speculative liquidation pressure, analysts said.

 

Lower crude oil and metal futures amid a firmer U.S. dollar index early Wednesday is seen aiding the lower tone, traders said.

 

Talk of slowing demand and technical pressure is expected to aid the declines as well, with lingering worries surrounding the U.S. economic outlook expected to entice traders into trimming length in the market further, analysts added.

 

Nevertheless, traders anticipate the market will maintain a choppy tone heading toward the March 31 U.S. planting intentions report, with acreage uncertainties and loner range demand outlooks serving as underpinning influences, a CBOT floor analyst adds.

 

A technical analyst said no serious near-term chart damage has occurred in the corn market recently. The corn bulls' next upside price objective is to push and close July corn above solid technical resistance at US$5.70. The next downside price objective is to push and close prices below solid support at Tuesday's low of US$5.49.

 

First resistance for July corn is seen at Tuesday's high of US$5.61 3/4 and then at US$5.65. First support is seen at US$5.55 and then at US$5.49.

 

On tap for the rest of the week, U.S. Department of Agriculture is scheduled to release its weekly export sales report Thursday at 8:30 a.m. EDT. Friday, CBOT markets will be closed in observance of the Good Friday holiday.

 

In other news, corn prices in China were mixed in the week to Wednesday, but analysts are still optimistic about the price outlook, given lower inventories and recovering demand. Prices in the major production regions in the northeast rose slightly from a week earlier on dwindling farmers' stocks, but fell slightly in the consumption regions in the south with increased supplies arriving.

 

Corrupt Chinese officials may be fabricating reports of bulging granaries to get hold of subsidies, meaning Beijing has an inflated idea about the size of its grain reserves, state media said Wednesday. Yuan Longping, a top rice scientist and a member of a body that advises the Chinese government, said some local grain reserves are actually empty, the Beijing Times said.

 

The State Administration of Grain has vowed to immediately send investigation teams to places Yuan mentioned and launch more random checks in the future, the Beijing paper said.

 

A group of French farmers Wednesday lost a bid to overturn a government ban on a strain of genetically-modified corn, a month after it came into force. France's highest administrative body, the state council, rejected the challenge from nine plaintiffs including a corn producers' association backed by U.S. agribusiness giant Monsanto Co. (MON), which produces the strain.