April 4, 2007

 

CBOT Corn Outlook on Wednesday: Up 5-6 cents higher on e-CBOT, overdone ideas

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 5 to 6 cents higher Wednesday, following the tone established in overnight activity with ideas that market is due for a bounce after the steep sell-off seen over the past several days, a commission house trader said.

 

In overnight electronic trading, May corn rose 6 cents to US$3.52 1/4 per bushel, July gained 5 3/4 cents to US$3.64 and December gained ended 5 cents higher to US$3.72 1/2. e-CBOT volume in May was 4,816 contracts.

 

The corn market has sold off sharply since Friday's acreage report and is due for a bounce, the commission house analyst said. In addition, there should be some spillover from the overnight strength, he added.

 

Corn planting needs to get off to a good start to ensure there is enough supply this fall and the near-term weather isn't favorable for planting and should underpin the market, a floor trader said. However, any rally attempt could be constrained if the funds decide to continue to liquidate their positions, the trader added.

 

In the western U.S. Midwest mainly dry and cold conditions are expected over the next five days with low temperatures possibly below 20 degrees Fahrenheit and highs only in the 30s F and low 40s F, DTN Meteorologix Weather said. These temperatures are 10-20F degrees below normal.

 

In the eastern sections of the region much colder weather with the chance of snow showers are possible Thursday with mainly dry and not as windy on Friday, Meteorologix Weather said. Temperatures are expected to average 15-25F degrees below normal in the period.

 

On daily technical charts, May corn prices hit a fresh five-month low Tuesday as the bearish fallout from the USDA report on Friday continues, a technical analyst said. There could be more downside pressure in the coming sessions on continued long liquidation, the analyst added.

 

The bears' next downside price objective is closing prices below solid support at US$3.40, while the bulls would begin to regain some upside technical momentum by pushing prices above solid chart resistance at US$3.62 1/2, the analyst added.

 

First resistance for May is seen at US$3.50 and then at US$3.55. First support is seen at Tuesday's low of US$3.43 and then at US$3.40.

 

In other corn news, China's National Grain and Oils Information Center CNGOIC has increased its 2007 corn production and acreage forecast as higher corn prices has caused a shift to more corn acres.

 

Corn production in 2007 is forecast to reach 147 million metric tonnes, up from the 144.4 million tonnes produced in 2006. Corn acreage is seen increasing to 27.6 million hectares in 2007, up from last year's 26.9 million.

 

Cash corn prices in China were stable in the week ended Wednesday as supply and demand were little changed, a trader in Beijing said.

 

Corn futures on China's Dalian Commodities Exchange settled little changed as the market consolidated, analysts said. The bench mark September contract rose RMB2 to RMB1,669/tonne.