September 25, 2007

 

CBOT Corn Outlook on Tuesday: 1-2 cents lower; consolidating after recent gains

 

 

Chicago Board of Trade corn futures are predicted to begin trading 1 to 2 cents lower Tuesday, consolidating after recent price gains and the absence news, analysts said.

 

In overnight electronic trading, December corn slipped 1 1/2 cents to US$3.72 per bushel and March fell 2 cents to US$3.87. e-CBOT volume in December was 3,669 contracts.

 

Corn should begin trading on the defensive, consolidating in the absence of fresh inputs and following the weaker tone in overnight activity, an analyst said.

 

Harvest progress was a little below expectations but still well above last year as well as the five-year average, and corn could see additional hedge pressure, the analyst said.

 

The U.S. Department of Agriculture reported Monday that 22% of the U.S. corn crop was harvested as of Sept. 23, above the 12% combined last year as well as the average of 14%.

 

In Illinois, 46% of the crop has been cut, well above the five-year average of 16%. In Iowa, 7% of the crop has been harvested, near the average of 5%.

 

The outside markets are weaker so any spillover from other commodities should be to the downside, a trader said.

 

In the U.S. Midwest, scattered showers are possible Tuesday and Wednesday before drier weather returns to the region, DTN Meteorologix Weather said. The rain isn't expected to have a big impact on harvest activities, the firm said.

 

On daily technical charts, December corn hit a fresh three-month high before backing off to close near the session low Monday as profit taking was featured after recent strong gains, a technical analysts said. The next upside objective for the bulls is to close prices above solid resistance at Monday's high of US$3.80 per bushel. The bears' next downside objective is closing prices below solid support at US$3.65 per bushel.

 

First resistance for December corn is seen at US$3.75, and then at US$3.80. First support is seen at US$3.70 3/4 and then at US$3.66.

 

In other corn news, China will sell at least 1 million metric tonnes of corn from state reserves in its domestic market at below market prices in an effort to keep volatile food prices in check, the government-run National Grain & Oil Trade Center said Monday. The auction will take place in early October, an official said.

 

Coceral, a European grain trade organization, cut its estimate of 2007-08 corn production by 11.4% to 44.8 million metric tonnes.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the May contract down RMB12 at RMB1,624 per metric tonne.