August 29, 2007

 

CBOT Corn Outlook on Wednesday: Down 1/2-1 cent; drifting, lacks fresh inputs

 

 

Corn futures on the Chicago Board of Trade are seen starting Wednesday's day session with modest declines, taking their cue from overnight trade amid the absence of fresh news to direct prices.

 

Analysts expect corn to open 1/2 to 1 cent lower.

 

In overnight electronic trading, September corn was 1/4-cent lower at US$3.27, and December corn was 1/2-cent lower at US$3.44 1/4.

 

The looming fall harvest is expected to apply pressure to prices, as increased seasonal supplies keep traders cautious of holding length ahead of a long holiday weekend, analysts said.

 

Variable crop conditions continue to keep a level of support beneath prices, but without fresh fundamental inputs traders anticipate range bound activity, with the path of least resistance lower as the harvest expands from the south to the central corn-belt, analysts added.

 

Otherwise, technical factors, spillover from neighboring grains and the volatility of the stock market are expected to influence corn futures in the absence of fresh news, traders said.

 

A technical analyst said market bears have gained downside technical momentum recently and are looking for more on the downside in the near term. The bulls' next upside price objective is to push December prices above solid resistance at US$3.58, which is the top of this week's downside price gap on the daily bar chart. The next downside price objective is to close prices below solid support at US$3.40.

 

First resistance for December corn is seen at US$3.50 and then at this week's high of US$3.54 1/4. First support is seen at Tuesday's low of US$3.43 and then at US$3.40.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest may become drier and then warmer for several days following Tuesday nights rainfall, helping to improve conditions for maturing crops. However, there is at least some risk for wet weather to return later in the 10 day period.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher. The benchmark May 2008 contract settled RMB14 higher at RMB1,616/tonne.

 

Cash corn prices in China were mostly stable in the week ended Wednesday, with prices in some regions higher on concerns over reduced output.