December 4, 2007

 

CBOT Corn Outlook on Tuesday: 2-3 cents higher on overnight trade, spreading

 

 

Chicago Board of Trade corn futures are predicted to begin trading 2 to 3 cents higher Tuesday, supported by higher prices in overnight activity and ideas that market participants will buy corn and sell wheat or soybeans, rebalancing their positions, analysts said.

 

In overnight electronic trading, March corn gained 2 3/4 cents to US$4.06 1/4 per bushel. e-CBOT volume in March was 5,524 contracts.

 

The market should draw support from the gains set in overnight activity, a commission house analyst said. The outside markets have turned higher and that should also add support, he added. A weaker dollar might also provide some strength to corn, the analyst added.

 

Corn could derive some additional support from commodity funds rebalancing their portfolios to include more corn and less soybeans and wheat, similar to Monday's trade, said Country Hedging in a note to clients.

 

Corn will also be following the weather in Argentina, a major competitor to the U.S. in export markets, an analyst said. If there are any weather issues there, corn prices will benefit, the analyst said.

 

In Argentina, thundershowers and cooler temperatures will favor developing crops, DTN Meteorlogix Weather said. Light to moderate showers with amounts of 0.10-0.75 inch and locally heavier are possible Tuesday before dry weather returns Wednesday and Thursday in northern and eastern areas of the country, Meteorlogix Weather said.

 

On daily open auction technical charts, March corn futures closed higher Monday, extending last week's trading range above the 62% retracement level of this summer's crossing decline at US$4.01, a technical analyst said. Stochastics and the relative strength index are neutral to bearish, signaling sideways to lower prices are possible near-term, the analyst said. A close below the reaction low crossing at US$3.91 1/2 would confirm a short-term top is in place while a close above Monday's high of US$4.09 3/4 would leave open a possible test of the 75% retracement level of US$4.14 1/4.

 

First resistance for March is seen at US$4.09 3/4, Friday's high and then at US$4.14 1/4. First support is seen at US$3.95 1/2 and then at US$3.91 1/2.

 

Deliveries posted against the Chicago Board of Trade December future were 2,571 contracts Tuesday. Large issuers included the customer account of Man Professional Clearing, which issued 677 contracts, and the customer account of Cunningham Commodities, which issued 567 contracts. Large stoppers included the customer account of MF Global, which stopped 623 contracts, the customer account of Man Professional Clearing, which stopped 450 contracts and the customer account of Cunningham Commodities, which stopped 255 contracts. The last trade assigned was Dec. 3.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled slightly lower with the benchmark May contract down RMB2 to RMB1,760/tonne.