November 28, 2006

 

CBOT Corn Outlook on Tuesday: Steady to down 1 cent on e-CBOT, lack of news

 

 

Chicago Board of Trade corn futures are expected to begin trading flat to 1 cent lower following a quiet session overnight, the lack of fresh news and ideas that corn could consolidate after recent price strength ahead of the end of the month, floor sources said.

 

In overnight e-CBOT trading, December corn fell 3/4 cent to US$3.70 3/4 cents per bushel and March slipped 1 1/2 cents to US$3.86 3/4. e-CBOT volume in March was 5,154 contracts.

 

Corn was quiet in the overnight session; there is no fresh news out and a bull market has to be fed everyday, a floor analyst said.

 

Corn has rallied over the past six sessions, making new life-of-contract highs several times, and could see some consolidation before the end of the month, a floor trader said. In addition, there could be some profit taking by professional trading firms to close out November, he added.

 

It is close to first notice day, so there could be some liquidation ahead of it, several analysts noted.

 

Activity could be two-sided and choppy as large speculators are at record long levels according to the Commodity Futures Trading Commission, they added.

 

Large speculative traders slightly increased their long corn futures and options on futures positions in the week ended Nov. 21, the CFTC reported Monday afternoon. Large spec traders increased their long positions by 16,699 contracts and added 14,017 contracts to their short holdings and are overall net long 290,782 contracts. Large commercial traders reduced their overall net short position; cutting their long positions by 28,177 contracts and their short positions by 31,918 contracts. Overall, large commercial traders are net short 183,701 contracts as of Nov. 21. The report was delayed a day due to last week's holiday.

 

On day session open auction technical charts the bulls are still in strong technical control of the corn market as funds appear still willing to establish fresh long positions, a technical analyst said. However, before the end of the year profit-taking pressure should develop, he added. The bulls' next major upside objective in March corn is closing prices above major psychological resistance at US$4.00 a bushel. The bears' near-term downside price target is closing prices below solid support at US$3.47 1/2 to fill an upside price gap on the daily chart, the technician added.

 

First support for March corn is seen at Monday's contract high of US$3.91 3/4 and then at US$3.95. First support is seen at Monday's low of US$3.83 1/2 and then at US$3.80.

 

Cash corn basis bids were unchanged to lower Tuesday. Peoria, Ill., was down 4 cents at 1 cent under the December future.

 

In other corn news, corn futures on China's Dalian Commodities Exchange ended mostly lower. The benchmark May contract fell RMB/1 to RMB 1,627/tonne.