November 14, 2007

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents; follower of outside markets

 

 

Corn futures on the Chicago Board of Trade are seen starting Wednesday's day session on firm footing, bolstered by supportive outside market influences.

 

Analysts expect corn to open 2 to 3 cents higher.

 

In overnight electronic trading, December corn was 2 1/2 cents higher at US$3.77 1/4, and March corn was 2 1/4 cents higher at US$3.94 1/4.

 

The market is starting the day as a follower, catching the inflationary attitude buoying metal and energy futures in early action, an analyst said.

 

Weakness in the U.S. dollar is seen as a supportive feature, making U.S. products more attractive to world importers, analysts said. News of fresh export sales is expected to provide some underlying fundamental support, analysts added.

 

Traders said end user buying will aide the supportive theme, with firming cash basis levels an underlying supportive feature as well.

 

Otherwise, the market remains in an acreage battle with other grains and oilseeds and that should help promote a firmer tone, with soybeans called to open with double digit gains, a CBOT floor broker added.

 

A technical analyst said market bulls have faded this week and an uptrend line on the daily bar chart has been penetrated on the downside and negated. Now there is also the specter of a bearish double-top reversal pattern forming on the daily bar chart. The corn bulls' next upside price objective is to push and close the December future above solid resistance at this week's high of US$3.82. The next downside price objective is to push prices below solid support at US$3.70.

 

First resistance for December corn is seen at US$3.77 1/2 and then at US$3.80. First support is seen at Tuesday's low of US$3.74 1/4 and then at US$3.70.

 

The U.S. Department of Agriculture announced Wednesday private exporters reported the sale of 180,000 metric tonnes of corn for delivery to Egypt in the 2007-08 marketing year. USDA also said private exporters reported export sales of 106,680 metric tonnes of corn for delivery to Japan in the 2007-08 marketing year.

 

The USDA said 94% of the corn crop was harvested as of Sunday, up from 89% last year and the five-year average of 89%. Analysts had expected about 94% of the crop would be harvested by Sunday. The corn harvest is wrapping up, and there was nothing particularly notable about the progress data for the crop, analysts said.

 

In other news, South Africa's corn yields for the 2007-08 season rose by 10,000 metric tonnes to 5.963 million tonnes last week, the South African Grain Information Service said Wednesday. The yields are just under 1 million tonnes short of the projected 6.902 million tonnes total production for the season.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher a tad, in spillover strength from soy futures. The benchmark May 2008 contract rose RMB12 to settle at RMB1,780/tonne.

 

China's cash corn prices were higher in the week ended Wednesday, as farmers were reluctant to sell. Rising transport fees due the government's hike in domestic oil product prices, also helped to support corn prices at high levels, said analysts.