March 25, 2008

 

CBOT Corn Outlook on Tuesday: Up 7-9 cents on follow-through buys, spillover

 

 

Chicago Board of Trade corn futures are poised for a firm start to Tuesday's day session, buoyed by follow-through buying from Monday's recovery bounce and spillover support from outside markets.

 

Analysts expect corn to open 7 to 9 cents higher.

 

In overnight electronic trading, May corn was 8 1/2 cents higher at US$5.33 1/4, July corn was 8 1/2 cents higher at US$5.45 1/2, and December corn was 7 3/4 cents higher at US$5.47 1/2.

 

Speculative money flow will once again shape the direction of prices, with buyers returning to the market on the backs of inflationary signals and bullish underlying fundamentals, analysts said.

 

Carryover momentum from Monday's strong gains is rekindling bullish enthusiasm, with overnight gains in crude oil and metal futures as well as declines in the U.S. dollar index providing supportive influences for speculative buyers, analysts added.

 

Meanwhile, lingering worries over smaller 2008 acreage coupled with early planting delays as a result of heavy rains and flooding in the southern Midwest is providing fundamental support to underpin prices as well, a CBOT floor analyst said.

 

The U.S. Department of Agriculture is slated to issue its prospective plantings estimates Monday, and the markets and traders anticipate the market will start to see some positioning ahead of the release, he added.

 

Otherwise, technically inspired activity is seen as a featured attraction, with spillover momentum from neighboring wheat and soybean futures expected to keep corn in the role of a follower, traders said.

 

A technical analyst said despite Monday advances, with prices closing near the session high, serious near-term chart damage has been inflicted recently to still suggest that a near-term market top is in place. The next upside price objective for July corn is to push and close prices above solid technical resistance at US$5.51 1/4. The next downside price objective is to push and close prices below solid technical support at last week's low of US$5.19 1/4. First resistance for July corn is seen at US$5.42 and then at US$5.46. First support is seen at US$5.30 and then at Monday's low of US$5.26

 

The DTN Meteorlogix Weather Service forecast said the wet weather pattern looks to continue over the eastern and southern Midwest in the near term, increasing concerns about spring field work delays. The Delta does not look to be very wet during the next five days but it may get wetter again during the six-to-10-day period.