October 30, 2007

CBOT Corn Outlook on Tuesday: Down 3-5 cents on outside markets, profit-taking

Chicago Board of Trade corn futures are predicted to start day session trading 3-to-5 cents lower Tuesday following weaker prices overnight and a pullback to lower levels in outside markets, analysts said.

In overnight electronic trading December corn fell 4 1/4 cents to US$3.71 3/4 per bushel and March retreated 4 1/2 cents to US$3.88 1/2. E-CBOT volume in December was 3,716 contracts.

The factors that supported corn in recent session have reversed course and should weigh on the market, a commission house analyst said. "Everything has flip-flopped," the analyst said. Crude oil, gold and silver are all down and the dollar is higher which helped to pressure values in overnight activity.

The market could see some position squaring, a trader said. It's the end of the month and some participants might even up some of their positions after the recent rally. The lack of fresh fundamental news might also limit the upside as harvest progress was in line with expectations and the weather is favorable for harvesting, the trader said.

The U.S. Department of Agriculture reported that 73% of the U.S. corn crop was harvested as of Oct. 28, in line with the 70%-75% expected by analysts and above the five-year average of 69%. In Iowa 63% of the crop has been combined, compared to the average of 68%. In Illinois, 95% of the crop has been harvested, above the five-year average of 85%.

The U.S. Midwest will experience weather favorable to the harvest of the remaining corn and soybeans this week, DTN Meteorlogix Weather said.

On daily open auction technical charts, December corn gapped open higher and settled higher but nearer the session low, a market technician said. Prices did hit a four-week high Monday and the bulls have an uptrend in place from the October low. The bulls next upside objective is to close prices above solid resistance at the September high of US$3.89 1/2. The next downside price objective for the bears is closing prices below solid support at US$3.67, which is the bottom of a downside price gap on the daily bar chart.

First resistance for December corn is seen at US$3.78 3/4, Monday's high and then US$3.80. First support is seen at US$3.75 and then at US$3.71.

In other corn news, Israel is tendering for 56,000 metric tonnes of U.S. corn and South Korea is tendering for 110,000 tonnes. Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract up RMB21 to RMB1,712/tonne.