September 19, 2007

 

CBOT Corn Outlook on Wednesday: 1-2 cents lower on harvest pressure, wheat

 

 

Chicago Board of Trade corn futures are predicted to begin trading 1 to 2 cents lower Wednesday, undermined by continued harvest pressure and spillover from lower wheat prices in overnight trade, analysts said.

 

In overnight electronic trading, December corn fell 2 1/4 cents to US$3.50 per bushel and March declined 1 1/2 cents to US$3.67 1/2. e-CBOT volume in December was 3,860 contracts.

 

Corn should open to the downside as harvest activity rolls on, combining what is expected to be the largest crop in history and pressing nearby futures lower, a commission house analyst said.

 

Wheat was lower overnight on profit-taking and is expected to start day session activity weaker and that could put corn on the defensive, another analyst said.

 

In overnight trading, December wheat fell 13 3/4 cents to US$8.55 1/4 per bushel and is called to open 8 to 12 cents lower.

 

A floor trader noted that if wheat opened sharply lower, corn could see some support from the unwinding of long wheat-short corn spreads.

 

A generally favorable weather pattern is expected to remain in place in the near-term for rapidly maturing U.S. Midwest crops, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, mostly dry conditions are forecast through Friday with above to much-above normal temperatures predicted, Meteorlogix Weather said.

 

In the eastern U.S. Midwest dry conditions or just a few light showers are expected Wednesday in western sections of the region before dry weather returns for the next several days. Temperatures are expected above to much-above normal for the period.

 

In the 6-to-10 day outlook, temperatures are predicted near-to-above normal with rainfall near-to-below normal, Meteorlogix Weather said.

 

On daily technical charts, December corn closed unchanged Tuesday as commercial buying helped temper earlier losses, a technical analyst said. A close above last week's high crossing at US$3.58 3/4 would temper the near-term bearish outlook in the market. From a broad perspective, December corn needs to close above US$3.72 or below US$3.24 1/2 to break out of the late-summer trading range and point the direction of the next trending move, the analyst said.

 

First resistance for December corn is seen at US$3.58 3/4 and then at US$3.72. First support is pegged at US$3.44 1/4 and then the reaction low crossing of US$3.38 1/2.

 

In other corn news, cash corn prices in China were little changed in the week ended Wednesday though market participants expect prices to rise on a decline in domestic output this year. Although cash corn supplies will increase when the new harvest supplies reach the market, traders are concerned that the government will reduce the size of the crop from its estimate of 149 million metric tonnes due to unfavorable weather in parts of the country, an analyst said.

 

Corn futures on China's Dalian Commodities Exchange settled lower Wednesday with the May contract down RMB/9 at RMB1,661 per metric tonne.