May 16, 2007

 

CBOT Corn Outlook on Wednesday: Down 1-2 cents; in tune with overnight action

 

 

Corn futures on the Chicago Board of Trade are poised for a lower start to Wednesday's day session, influenced by overnight price action in absence of fresh directive fundamental news.

 

Analysts expect corn to open 1 to 2 cents lower.

 

In overnight electronic trading, July corn was 2 1/4 cents lower at US$3.69 1/4, and December corn was 2 cents lower at US$3.76 1/2.

 

The market is seemingly stuck in a trading range, with bearish planting conditions applying pressure while underlying supply and demand concerns remain underpinning features, analysts said.

 

Near-term weather looks conducive for farmers to get the remainder of their Midwest fields planted by early next week, but with no room for error in yield potential to meet strong demand, traders are poised to limit downside moves, analysts added.

 

Technical factors will play a key role in price action as well, with good underlying end user demand beneath the market and the recent failure of prices to test the bottom end of a recent trading range seen attracting buyers on breaks, traders added.

 

A market technician said July corn prices Tuesday closed nearer the session high and scored a bullish outside day up on the daily bar chart. Look for a trading range between last week's low of US$3.54 and the May high of US$3.96 1/2 for the near term, he said. The next downside price objective for market bears is closing prices below solid support at US$3.54 a bushel. Meanwhile market bulls would regain some fresh upside technical momentum by pushing prices above US$3.77, which would fill on the upside last week's big downside price gap on the daily bar chart.

 

First resistance for July corn is seen at Tuesday's high of US$3.74 1/2 and then at US$3.77. First support is seen at US$3.70 and then at US$3.68.

 

The DTN Meteorlogix Weather Service forecast said there is a slight chance for frost Wednesday night in the western Midwest, but it should not cause significant problems for emerging crops. Planting weather should be favorable for about 5 days. In the eastern Midwest, wet conditions Wednesday due to Tuesday's rainfall may cause field work delays. A chance for frost in some northern and eastern areas is not expected to be a significant problem for emerging crops.

 

In demand news, the U.S. Department of Agriculture said Wednesday there were two separate export sales of corn to Japan. For the 2006-07 marketing year, 56,896 tonnes of corn was sold and for the 2007-08 marketing year, sales were 113,792 tonnes, totaling 170,688 tonnes for the two marketing years.

 

In other news, France's 2007-08 corn plantings are down 30,000 hectares from last year at 1.44 million hectares, according to the French state grains board, L'Office National Interprofessionnel des Grandes Cultures, or ONIGC, Wednesday.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher on rising cash prices. The benchmark September 2007 contract settled RMB6 higher at RMB1,685/tonne.