November 20, 2007

CBOT Corn Outlook on Tuesday: Mixed opening seen; outside markets support

Chicago Board of Trade corn futures are predicted to begin trading mixed Tuesday, as spillover from sharp losses in overseas commodities markets is expected to weigh on prices. Higher prices in energy and metals markets and a weaker dollar are expected to provide support, analysts said.

In overnight electronic trading, December corn fell 3/4 cent to US$3.76 3/4 per bushel and March also slid 3/4 cent to US$3.93 3/4. e-CBOT volume in March was 4,106 contracts.

Prices were lower in overnight trading on a steep decline in Chinese commodities prices, so there could be some negative follow-through from that weakness, an analyst said. However, any weakness is expected to be limited as crude oil is trading more than US$1 a barrel higher, silver and gold are posting strong gains and the dollar is weaker. The market could see a two-sided trading session, the analyst said.

The lack of fresh fundamental news might limit price volatility in a slow holiday trading week, a trader said. The weekly crop progress report, released Monday, showed the U.S. corn harvest rapidly coming to a close, the trader said.

The U.S. Department of Agriculture reported that 97% of the U.S. corn crop was harvested as of Nov. 18, above the five-year average of 94%. In Illinois, the harvest has been completed and in Iowa, 97% of the crop has been combined, slightly above the average of 96%.

On daily open auction technical charts, March corn futures closed lower Monday and traded a bearish "outside day" down on the daily bar chart, a technical analyst said. Little technical damage has occurred, but market bulls have faded. Corn continues to be influenced by the inflationary markets, crude oil, gold and the U.S. dollar. The next upside objective for market bulls is to close prices above major resistance at US$4.00 per bushel. The next downside price objective remains pushing prices below support at last week's low of US$3.91 1/2.

First resistance for March corn is seen at US$3.97 1/2 and then at US$4.00. First support is seen at US$3.93 1/2 and then at US$3.91 1/2.

In other corn news, corn futures on China's Dalian Commodities Exchange settled sharply lower with the benchmark May contract down RMB29 to RMB1,723/tonne.