March 26, 2008

 

CBOT Corn Outlook on Wednesday: Up 7-9 cents, spillover, fundamentals, outsides

 

 

Corn futures on the Chicago Board of Trade are expected begin Wednesday's day session on firm footing, continuing its recovery bounce on a combination of supportive outside influences, spillover from soybeans and bullish underlying fundamentals, analysts said.

 

Analysts expect corn to open 7 to 9 cents higher.

 

In overnight electronic trading, May corn was 8 3/4 cents higher at US$5.53 1/2, July corn was 9 cents higher at US$5.66, and December corn was 9 1/4 cents higher at US$5.69.

 

The overnight theme will set the tone in early action, as the absence of fresh bearish news, speculative money flow returning to the market in conjunction with the weak U.S. dollar and supportive acreage and demand outlooks underpinning prices, analysts said.

 

Lingering worries over smaller 2008 acreage coupled with early planting delays as a result of heavy rains and flooding in the southern Midwest is seen providing fundamental support to buoy 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, traders said.

 

Firmer cash basis levels is expected generate light support, as last week's break in prices dried up farmer selling in conjunction with a lack of commercial hedging, analysts added.

 

A technical analyst said some recent chart damage was repaired Tuesday and market bulls have regained some fresh upside technical momentum. The next upside price objective is to push and close July corn above solid technical resistance at US$5.67. The next downside price objective is to push and close prices below solid technical support at US$5.37 1/2, which would fill on the downside Tuesday's big upside price gap on the daily bar chart.

 

First resistance for July corn is seen at US$5.60 and then at US$5.67. First support is seen at US$5.50 and then at Tuesday's low of US$5.46 1/2.

 

The DTN Meteorlogix Weather Service forecast said the wet weather pattern looks to continue over the eastern and southern Midwest, increasing concerns about spring field work delays. The Delta does not look to be very wet during the next 5 days but it may get wetter again during the 6 to 10 day period.

 

In other news, South Africa exported 9,458 metric tonnes of white corn last week, up from 8,891 tonnes the week before, the South African Grain Information Service said Wednesday. The consignment brings total white corn exports since April last year to 295,128 tonnes.

 

Corn prices in China's non-producing regions were mostly lower in the week ended Wednesday on sluggish feedmeal demand and falling purchase costs. But prices remained mostly stable in the northeastern producing provinces as farmers were reluctant to sell.

 

China has exported 25,000 metric tonnes of corn to Taiwan under a special quota to help ease supply tightness on the island, an industry participant said Wednesday. Whether China will issue more corn export quotas to Taiwan depends on the island, which strictly controls grain imports from China, said Gu Lifeng, manager of the corn department at Cofco Ltd., which arranged the exports.

 

Meanwhile, alternative crop choices and high input costs were expected to cause a small decline in the amount of area that will be seeded to corn in the province of Ontario this spring, according to an official with the Ontario Corn Producers Association.