October 25, 2006

 

CBOT Corn Outlook on Wednesday: 2-3 cents higher on follow through, wheat

 

 

Chicago Board of Trade corn futures are expected to begin trading 2-3 cents higher Wednesday as follow through from Tuesday's gains and spillover from higher wheat futures in overnight activity are expected to support prices, source said.

 

In overnight e-CBOT trading, December corn gained 3 1/4 cents to US$3.27 1/2 cents per bushel and March rose 3 cents to US$3.38 3/4. e-CBOT volume in December was 4,368 contracts.

 

The market should start out higher on follow through from Tuesday's strength as well as the overnight rally in wheat values, a commission house analyst said.

 

New life-of-contract highs were set in most contract months in Tuesday's trade.

 

Wheat futures scored good gains overnight as Australian wheat exporter AWB Ltd. (AWB.AU) revised its forecast for new crop wheat production to a range of 9 million metric tonnes to 11 million tonnes from its previous estimate of 12 million to 15 million tonnes.

 

December wheat rose 9 1/4 cents to US$5.31 3/4 in overnight e-CBOT trading.

 

Speculative money supported the market on Tuesday and market direction could be determined by what the commodity funds want to do Wednesday, a floor trader said.

 

On day session open auction technical charts, December corn futures scored a fresh contract high as fund buying was featured again, a technical analyst said. The bulls' next upside price objective is closing prices above solid resistance at US$3.50 per bushel. The bear's next near-term downside price objective is closing prices below solid support at US$3.00, the analyst said.

 

First resistance for December corn is seen at US$3.26 3/4, Tuesday's contract high and then at US$3.30. First support is seen at US$3.20 and then at US$3.16 1/4.

 

Corn basis bids were unchanged to higher Wednesday. Central Illinois was unchanged at 6 cents over the December future.

 

In other corn news, cash corn prices in China were stable in the week ended Wednesday, sources said. Demand for feed corn increased in some provinces but not enough to bring about a recovery in prices, an analyst said. Prices are expected to decline in mid-November as newly harvested supplies enter the market, sources added.

 

Taiwan's Member Feed Industry Group of MFIG, purchased 60,000 metric tonnes of U.S. corn from Cargill in a tender concluded Wednesday, a Taipei-based trader said.

 

South Korea's Major Feedmill Group, or MFG, bought 110,000 metric tonnes of U.S. corn from Cargill in a tender concluded Tuesday, a trader in Seoul said Wednesday.

 

Corn futures at China's Dalian Commodities Exchange settled mostly higher. However, the May contract ended unchanged at RMB 1,476/tonne.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report at 7:30 a.m. CDT.