October 31, 2007

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents on outside markets, short covering

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 2 to 3 cents higher Wednesday following firm prices in overnight activity and short covering after Tuesday's weakness and ahead of the Fed's meeting on interest rates.

 

In overnight electronic trading, December corn rose 2 1/4 cents to US$3.72 1/2 per bushel and March gained 2 cents to US$3.89 1/2. E-CBOT volume in December was 6,174 contracts.

 

Corn was higher in overnight activity on short covering, a weaker U.S. dollar and a rebound in inflationary outside markets, and those factors should supply support for prices in daytime activity, a trader said.

 

All the markets are waiting for the Fed's decision on interest rates, with corn expected to consolidate its losses set Tuesday ahead of the decision. There is no fresh news, with price direction set by other markets, the path of the U.S. dollar and concerns about inflation, an analyst said.

 

Harvesting of the U.S. corn crop is expected to continue over the next several days. Mainly dry weather is expected in the U.S. Midwest through Sunday, DTN Meteorlogix Weather said, though there could be a few sprinkles in the eastern section of the region Wednesday. Temperatures are forecast to average near-to-above normal over the next several days.

 

On daily open auction technical charts, December corn gapped open lower and ended nearer the session low to form a bearish island reversal top pattern, a technical analyst said. The last two island tops were immediately followed by a significant price trend, the analyst added. The bulls still have the near-term technical advantage but did fade Tuesday. The bulls next upside objective is to close prices above solid resistance at this week's high of US$3.78 3/4. The next downside price objective for the bears is closing prices below support at US$3.60.

 

First resistance for December corn is seen at Tuesday's high of US$3.73 1/2 and then at US$3.75. First support is seen at US$3.67 and then at US$3.63.

 

In other corn news, Asian buyers could see higher prices for corn if the Federal Reserve cuts interest rates, adding pressure to the U.S. dollar, analysts said Wednesday.

 

South Africa's corn yields for the 2007-08 crop year rose by 16,000 metric tonnes to 5.90 million last week, the South African Grain Information Service said Wednesday. The yields are just over a million tonnes short the projected 6.9 million tonnes expected.

 

South Korea passed on its tender for 110,000 tonnes of U.S. corn overnight.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark May contract down RMB6 to RMB1,706/tonne.