May 21, 2008

 

CBOT Corn Outlook on Wednesday: 3-4 cents higher on outside support

 

 

Chicago Board of Trade corn futures are expected to open 3 to 4 cents higher Wednesday on strength from outside markets, traders said.

 

In overnight trading, July corn was up 3 cents to US$5.92 3/4, September corn was up 3 1/4 cents to US$6.05 1/2, and December corn was up 3 1/2 cents to US$6.19 1/2.

 

Crude oil futures, which topped US$130 per barrel for the first time today, will continue to give strength to corn and other commodities, traders said. Higher crude oil is especially supportive to corn, an analyst said, because it makes ethanol production more attractive.

 

A weaker dollar and higher gold prices are also supportive to corn, traders said. Dry weather forecasts will continue to apply downward pressure, however.

 

"Good weather for corn is limiting its ability to bounce," a trader said.

 

The DTN Meteorlogix forecast calls for mostly dry conditions throughout the U.S. corn belt through Sunday.

 

An analyst said the market is unlikely to have any drastic movements this week, as traders start looking ahead to the long Memorial Day weekend. Most will likely keep an eye on the weather forecasts and wait until next week to see if news emerges that could affect corn.

 

"I don't think we'll see much downside potential unless there's a collapse in the energy markets," said Shawn McCambridge, a senior grains analyst with Prudential-Bache. "There's not much of a fundamental feature in corn, other than what we've been trading the last two weeks."

 

The next upside price objective is to push July corn prices above solid technical resistance at US$6.00, a technical analyst said. July corn rallied to as high as US$6.03 on Tuesday but was unable to hold its gains.

 

The next downside price objective is to push and close July corn prices below solid support at US$5.79 1/4. First resistance is seen at US$5.95 and then at US$6.00. First support is seen at Tuesday's low of US$5.86 1/4 and then this week's low of US$5.82.

 

In international news, China's corn prices in the major producing regions were higher in the week to Wednesday, as industrial processing plants increased their bidding prices to attract higher volumes.