August 16, 2006

 

CBOT Corn Outlook on Wednesday: 2-3 cents higher on firm cash, oversold ideas

 

 

Corn futures are forecast to begin trading 2-3 cents higher Wednesday following stronger prices overnight and ideas recent losses were overdone and due for a correction, sources said.

 

In overnight e-CBOT trading, September corn rose 2 3/4 cents to US$2.24 3/4 per bushel and December also ended up 2 3/4 cents to US$2.41 1/4. Volume in December in e-CBOT overnight activity was 5,605 contracts.

 

The market should be supported by the lack of producer selling, a floor analyst said. Cash market values are firming as farmers hold their crops rather than sell at these levels he added. Follow through from the overnight session should also provide support, he noted.

 

The market has gone too deep to the downside due to the fund selling and long liquidation and is due for a rebound, said Roy Huckabay, executive vice president with the Linn Group. There are still some questions about the corn in the western corn belt in regards to the impact of the heat during pollination of the crop, he added.

 

Over the past ten trading sessions, December corn has fallen 25 3/4 cents.

 

On technical charts, the bears are in command and their next near-term downside price objective is closing December futures below support at the contract low of US$2.34 1/4, a technical analyst said. First resistance is seen at US$2.41 1/4 and then at US$2.45. First support is pegged at US$2.35 1/2, Tuesday's low and then at 2.34 1/4, the contract low.

 

Cash corn basis bids were unchanged to higher Wednesday morning. Central Illinois was unchanged at 16 cents under the September future. Burlington, Iowa, was 4 cents higher at 18 cents under the September.

 

In other corn news, corn prices in China were mostly unchanged in the week ended Wednesday, analysts said. Prices in China's two-largest producing areas were unchanged with demand in the southern part of the country slightly higher, they added.

 

The Korea Feed Association KFA has bought a combined 165,000 metric tonnes of U.S. origin corn from trading firms Bunge and Archer Daniels Midland in a tender concluded Wednesday, an association official said.

 

Corn futures on China's Dalian Commodities exchange ended mostly higher with May 2007 up RMB/7 at RMB/1,400/tonne.