October 3, 2007

 

CBOT Corn Outlook on Wednesday: 1-2 cents lower on spillover, follow through

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 1 to 2 cents lower Wednesday, as spillover from sharply lower wheat and soybean prices and follow through technical selling from Tuesday is expected to weigh on prices, analysts said.

 

In overnight electronic trading, December corn slipped 2 1/2 cents to US$3.46 1/4 per bushel and March fell 2 cents to US$3.63 1/2. E-CBOT volume in December was 12,795 contracts.

 

Wheat was sharply lower overnight with soybeans also declining, and corn should open on the defensive on spillover, an analyst said. In overnight trade, December wheat fell 22 1/2 cents to US$9.00 per bushel and November soybeans dropped 10 1/4 cents to US$9.33 1/2.

 

Corn fell beneath its major moving averages Tuesday and it could come under pressure from additional technical selling as speculators liquidate their positions, a trader said.

 

The lack of fresh bullish news will limit the upside in corn, an analyst said. All the information received this fall points to a big crop getting larger. Harvest reports continue to report good yields and the market is anticipating that the government will raise its production estimate next week, the analyst said.

 

Wet weather may lead to light harvest delays in the western and northern U.S. Midwest in the next several days, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, there is a chance for light rain or showers later Thursday and into Friday with showers and thunderstorms on Sunday or Monday. Temperatures are expected to average well above normal for most of the period.

 

In the eastern U.S. Midwest, mainly dry weather is forecast Thursday through Saturday with scattered showers and thundershowers Sunday or Monday, Meteorlogix said. Temperatures are expected to average above to well-above normal in the period.

 

On daily open auction technical charts, December corn gapped lower on the daily bar chart and hit a fresh two week low. Serious near-term chart damage occurred to suggest a near-term market top is in place and that more downside price potential exists in the near term, a technical analyst said. Harvest pressure, hedge related selling and lower outside markets all contributed to the price decline, the analyst said. The next downside price objective for market bears is closing prices below solid support at the September low of US$3.35 1/2. The bulls' next upside price objective is to close prices above solid resistance at US$3.60.

 

First resistance for December corn is seen at US$3.50, and then at US$3.55. First support is seen at US$3.45 and then at US$3.40.

 

In other corn news, the Philippines is seeking 70,000 metric tonnes of optional origin corn for shipment in December, the country's National Food Authority said Wednesday.

 

Corn futures on China's Dalian Commodities Exchange remained closed due to the National Day holiday.