October 16, 2007

 

CBOT Corn Outlook on Tuesday: 1-2 cents lower following overnight weakness

 

 

Chicago Board of Trade corn futures are expected to start trading 1 to 2 cents lower Tuesday following the tone established in overnight trading, though strong gains in energy futures are expected to temper the downside, analysts said.

 

In overnight electronic trading December corn fell 1 1/2 cents to US$3.60 1/2 per bushel and March declined 1 cent to US$3.77 1/4. E-CBOT volume in December was 3,604 contracts.

 

"It's all about money flowing into energies and commodities in general," a commission house analyst said. There is little fresh news out for corn however, the rally to new highs in crude oil should benefit commodities with the downside in corn limited, the analyst said.

 

Corn might see some strength from the unwinding of wheat-corn spreads, an analyst said. Wheat futures were down hard overnight, and if people liquidate their long wheat-short corn spreads, it will also limit corn's downside, the analyst said. Monday's crop progress report was in line with expectations and is not expected to have much, if any impact, the analyst added.

 

The U.S. Department of Agriculture reported that 53% of the U.S. corn crop was harvested as of Oct. 14, within the 50%-55% expected by analysts, and above the 39% cut last year and the five-year average of 41%.

 

In Iowa 37% of the crop was harvested, while in Illinois 81% of the crop has been combined.

 

On daily open auction technical charts, December corn settled near the session high and hit a fresh two-week high, a market technician said. Market bulls have regained upside technical momentum amid the general rally in commodity prices due to the weaker dollar, the technician said. The bulls' next upside price objective is to push prices above solid resistance at US$3.68 per bushel, which is the top of a big downside price gap on the daily bar chart. The next downside price target for the bears is to close prices below solid support at US$3.50.

 

First resistance for December corn is seen at US$3.62 1/2, Monday's high and then at US$3.68. First support is seen at US$3.60 and then at US$3.57.

 

In other corn news, the Philippines plans to buy 200,000 metric tonnes of duty-free corn in a tender in late November for shipment early next year, a feedmill industry official said Tuesday.

 

Corn futures on China's Dalian Commodities Exchange settled higher on speculative buying a trader said, with the May contract RMB10 higher at RMB1,661/tonne.