March 21, 2007

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents on follow through, oversold ideas

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 1-to-2 cents higher Wednesday as follow through from Tuesday's late gains and higher prices in overnight activity are expected to support prices on the opening, a floor analyst said.

 

In overnight electronic trading, May corn gained 2 1/4 cents to US$4.07 1/2 per bushel, July also rose 2 1/4 cents to US$4.19 1/4 and December gained 3/4 cent to US$4.10. E-CBOT volume in May was 4,161 contracts.

 

The market should be higher on follow through short covering from Tuesday, a floor trader said. Corn has been oversold and it is due for a bounce and the outside markets are higher which should also be supportive, he said.

 

Tuesday was the first session where bull spreading was the feature, an encouraging sign for a market that also featured short covering after recent weakness and this could continue in Wednesday's trade, an analyst said.

 

In the U.S. Midwest scattered showers are forecast for Wednesday with .10-.25 inch expected north and a few light showers south, DTN Meteorologix Weather said. Showers and thundershowers are expected Thursday in western sections of the region with late day showers possible east. Rainfall totals should average .20-.75 inch. Friday, mostly dry conditions are expected north with showers and thundershowers possible south, Meteorologix Weather said. Temperatures are expected to average above normal in the period.

 

On daily open auction technical charts, CBOT May corn ended higher Tuesday on short covering and cooler and wetter forecasts, a technical analyst says. However some near-term chart damage has occurred and May remains in a four-week-old down trend on the daily bar chart, the analyst said. To regain fresh upside momentum, market bulls will need to close prices above solid technical resistance at US$4.15. The bears next downside price objective is closing prices beneath solid support at US$3.92 1/4.

 

First resistance for May corn is seen at US$4.08 and then at US$4.10. First support is seen at US$4.00 and then at US$3.95.

 

In other corn news, corn prices in China declined in the week ended Wednesday on an increase in available supplies.

 

Recent warm weather has made storage more difficult and has encouraged farmers to sell, a Jillin-based analyst said. Jillin is China's largest corn producing province.

 

Corn futures on China's Dalian Commodities Exchange settled slightly higher with the bench mark September contract up RMB2 at RMB1,695/tonne.