March 27, 2007

 

CBOT Corn Outlook on Tuesday: Flat-1 cent lower on follow through

 

 

Chicago Board of Trade corn futures are expected to begin day session trading flat to 1 cent lower Tuesday as light follow-through selling from Monday's losses and a slightly weaker tone in overnight trading is expected to weigh on prices at the start, a commission house analyst said.

 

In overnight electronic trading, May corn slipped 3/4 cent to US$3.90 1/4 per bushel, July fell 1 1/2 cents to US$4.02 and December edged 1/4 cent lower to US$4.01. e-CBOT volume in May was 4,026 contracts.

 

Corn was lower overnight following the losses set in Monday's trade and could see additional weakness at the start, an analyst said. However, corn has declined sharply over the past several sessions and could draw some support from position evening ahead of Friday's U.S. Department of Agriculture's planting intentions and stocks reports, he said.

 

The funds were sellers Monday and the market could see some more downward pressure if the funds decide to liquidate further, a floor trader said. Friday's report is expected to have a big impact on market direction, so there could be some short covering ahead of it, the trader added.

 

In the western U.S. Midwest, periods of scattered showers and thundershowers are expected in the next several days with temperatures averaging above normal, DTN Meteorologix Weather said.

 

In the eastern sections of the region, there is a chance for light showers Wednesday with drier weather expected Thursday, Meteorologix Weather said. Temperatures are expected to average above normal.

 

The 6- to 10-day weather outlook for the region calls for precipitation near to above normal with temperatures near to below normal

 

On daily open technical charts, CBOT May corn gapped open lower and traded down to a 2 1/2-month low and some near-term chart damage was inflicted, a technical analyst said. Market bulls would regain some upside technical momentum by pushing prices above solid chart resistance at US$4.02 3/4, which would fill on the upside Monday's downside price gap on the daily chart, the analyst said. The bears' next downside objective is closing prices below Monday's low of US$3.85.

 

First resistance is seen at US$3.95 and then at US$4.00, while first support is seen at US$3.85 and then at US$3.80.

 

In other corn news, the Korea Corn Processing Association or Kocopia, purchased 55,000 metric tonnes of optional origin corn from Dreyfus in a tender concluded Tuesday, a company official said. The corn will be from the U.S., China or South America with delivery in June.

 

Corn futures on China's Dalian Commodities Exchange settled modestly lower with the bench mark September contract down RMB4 at RMB1,678/tonne.