October 24, 2007

 

CBOT Corn Outlook on Wednesday: Down 1-2 cents on wheat weakness, outside markets

 

 

Chicago Board of Trade corn futures are expected to begin trading 1-to-2 cents lower Wednesday, as sharply lower wheat prices in overnight trade are expected to negatively influence price direction at the opening, analysts said.

 

In overnight electronic trading December corn fell 2 cents to US$3.59 per bushel and March also declined 2 cents to US$3.75 3/4. E-CBOT volume in December was 4,548 contracts.

 

Corn should start out lower on spillover from an expected lower start in wheat futures as corn lacks fresh inputs, an analyst said. News that Russia decided not to increase its wheat tariff beyond the current 10% pushed wheat futures sharply lower in overnight activity. Dec wheat futures ended the evening session 16 cents lower at US$8.25 per bushel.

 

Outside markets are lower and the dollar is higher which should also limit buying interest, a trader said. In addition producers are continuing to work their way to finishing up the harvest of a record corn crop with favorable weather seen over the next several days helping harvest activity, the trader said.

 

In the U.S. Midwest dry weather is forecast through Thursday with only a chance for a few light showers Friday, DTN Meteorlogix Weather said. Temperatures are forecast to average near-to-below normal south and above normal north.

 

In the eastern U.S. Midwest, dry weather is expected Thursday with temperatures near-to-above normal, Meteorlogix said.

 

On daily open auction technical charts, December corn closed nearer the session low with corn bulls fading, a technical analyst said. No serious chart damage occurred Tuesday and the uptrend from the October low is still in place, but barely, the analyst said. A solid down day Wednesday would likely cause near-term chart damage. The bulls' next upside price objective remains pushing prices above solid resistance at last week's high of US$3.71, with the bears' next objective closing prices below support at US$3.50.

 

First resistance for December corn is seen at US$3.62 1/2 and then at US$3.65. First support is seen at US$3.59 and then at US$3.55.

 

In other corn news, 14,500 metric tonnes of Indian corn has been sold to Malaysia for November delivery, a trade executive said Wednesday. Indian corn to Malaysia is currently around US$45 per tonne cheaper than U.S. corn due to lower freight charges.

 

Cash corn prices in China were mostly stable in the week ended Wednesday with some traders on the sidelines amid ample stocks during the ongoing harvest. Looking forward, higher interest rates will discourage market participants from buying corn and storing it for speculation, analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB6 at RMB1,648/tonne.