November 27, 2007

 

CBOT Corn Outlook on Tuesday: Down 1-2 cents; outside market influences weigh

 

 

Corn futures on the Chicago Board of Trade are expected to start Tuesday's day session on the defensive, in tune with the overnight theme amid weakness in outside inflationary markets, analysts said.

 

Crude oil futures and metal futures are lower in early action, with the U.S. dollar index higher.

 

Analysts expect corn to open 1 to 2 cents lower.

 

In overnight electronic trading, December corn was 3/4-cent lower at US$3.85, and March corn was 1 1/2 cent lower at US$4.01 3/4.

 

The absence of fresh fundamental news have futures poised for a lower start, influenced by pressures from outside markets and spillover weakness from soybeans, a CBOT floor analyst said.

 

The market has little fresh news to lead prices, with a quiet news front placing greater importance on the price moves of outside markets for early price direction, he added.

 

Nevertheless, solid underlying demand remains a supportive feature to limit declines, but traders will closely eye outside markets as futures remain vulnerable to the impact of the speculative sector amid broad based commodity wide price movements, analysts said.

 

A technical analyst said corn bulls still have the near-term technical advantage. The corn bulls' next upside price objective is to push and close March prices above solid technical resistance at Monday's high of US$4.09 a bushel. The next downside price objective is to push prices below solid support at US$3.95.

 

First resistance for March corn is seen at US$4.07 1/2 and then at US$4.09. First support is seen at Monday's low of US$3.99 1/4 and then at US$3.95.

 

Large commercial traders reduced their long and short CBOT corn futures and options on futures positions, the Commodity Futures Trading Commission said Monday in a commitment of traders' supplemental report. Large commercial traders cut their long positions by 50,279 contracts and exited out of 35,419 short positions and are now net short 416,208 contracts, the CFTC said. Large speculators increased their long holdings by 5,911 contracts and added 3,413 contracts to their short positions and are now net long 155,778 contracts. Index funds cut their short positions by 2,790 contracts and reduced their long positions by 449 contracts and are now net long 358,184 contracts, the CFTC said.

 

The DTN Meteorlogix weather forecast said drier and warmer to hotter weather during the week will begin to reduce soil moisture for Argentina corn crops. Today's long range charts suggest a return to cooler and wetter weather. Should this be verified it would favor crops, especially after this week's hotter weather, Meteorlogix said.

 

In other news, South African farmers plan to plant 2.75 million hectares of corn in the 20070-08 season, 84,000 ha greater than the forecast in September and 201,000 ha more than last season, the Crop Estimates Committee said Tuesday. An I-Net Bridge poll had predicted the area for corn planting to be 2.80 million hectares because of good rains and higher corn prices.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled lower. The benchmark May 2008 contract settled RMB17 lower at RMB1,783/tonne.