August 15, 2007

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents on e-CBOT, recent weakness Overdone

 

 

Chicago Board of Trade corn futures are expected to begin trading 2-to-3 cents higher Wednesday, bolstered by firm prices overnight and ideas recent weakness was overdone and due for a correction, analysts said.

 

In overnight electronic trading September corn gained 2 3/4 cents to US$3.30 1/4 per bushel and December rose 2 1/4 cents to US$3.47 1/4. E-CBOT volume in December was 5,135 contracts.

 

The market should draw some support from the higher prices in overnight trade and the idea that recent weakness was overdone and due for a correction, a commission house analyst said. In addition, any strength in wheat futures could help underpin corn, the analyst added.

 

Any upside in prices could be limited, a floor trader said, as there are scattered rains forecast for both the eastern and western U.S. Midwest. In addition, the tropical depression in the Gulf of Mexico could bring good rains to the U.S. southeast. The market will also be watching the stock market for further signs of weakness, the trader added.

 

In the western U.S. Midwest, light or locally moderate showers are expected in central and southern locations through Thursday with the chance for showers to redevelop Friday, DTN Meteorologix Weather said. Rainfall amounts in the period are predicted to range from 0.25-to-0.75 inch and locally heavier. Temperatures are expected to average near-to-below normal north and above-normal south Thursday and Friday.

 

In the eastern U.S. Midwest, there is a chance for light to locally moderate showers over the next several days in north and eastern areas, Meteorologix Weather said. Amounts are expected to be between 0.10-to-0.75 inch and locally heavier, with temperatures predicted to average above normal Thursday and near-to-above-normal Friday.

 

In the 6-to-10 day forecast, temperatures are expected to average near-to-below normal northwest and near-to-above normal southeast. Precipitation is expected near-to-above normal west and north, near-to-below normal southeast.

 

On daily technical charts, December corn closed lower with market bulls fading fast on the lack of fresh bullish news, a technical analyst said. The bulls need to close December above US$3.60 per bushel to regain upside technical momentum, the analyst added.

 

First resistance for December corn is seen at US$3.52 1/2 and then at US$3.55, this week's high. First support is seen at US$3.41 3/4, Tuesday's low and then at US$3.40.

 

In other corn news, cash corn prices were stable in China in the week ended Wednesday despite recent rains easing a drought in the northeast section of the country, analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the May contract up 2 yuan at RMB1,592 per metric tonne.

 

Argentina's 2007-08 corn production is expected to be similar or slightly higher than the 22 million metric tonnes produced last year, Argentine corn association Maizar said Tuesday. While planted area is expected to be 12% larger, yields are expected to be lower due to heavy rainfall last season, the association said.