December 5, 2007

 

CBOT Corn Outlook on Wednesday: Called 1-2 cents higher on follow through buying

 

 

Chicago Board of Trade corn futures are expected to start day session trading 1 to 2 cents higher as follow through buying from Tuesday's rally to 5 1/2 month highs is expected to support prices, analysts said.

 

In overnight electronic trading, March corn rose 1 cent to US$4.12 1/4 per bushel. E-CBOT volume in March was 6,548 contracts.

 

Corn should open higher on follow through buying from Tuesday, an analyst said. On daily technical charts March corn moved through resistance levels which encouraged speculative buying and price direction will be determined by the level of speculative interest, the analyst said.

 

Stronger crude oil prices might also provide underlying strength with corn supported via its ethanol component, a trader said. In addition, there are concerns about the level of dryness in Argentina, a major corn exporter, the trader added.

 

In Argentina, recent rainfall has helped favor crop development in the past two days but more rain is needed, DTN Meteorlogix Weather said. During the next seven days significant rainfall is unlikely to occur, Meteorlogix said.

 

On daily open auction technical charts, March corn closed higher and reached a 5 1/2 month high Tuesday. Corn has had a bullish upside "breakout" from a four-week-old trading range on the daily chart, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at US$4.23 per bushel with the next downside objective is closing prices below support at US$4.00.

 

First resistance for March is seen at US$4.13 3/4, Tuesday's high and then at US$4.17. First support is seen at Tuesday's low of US$4.06 and then at US$4.00.

 

Deliveries posted against the Chicago Board of Trade December future were 2,267 contracts Wednesday. Large issuers included the customer account of Man Professional Clearing which issued 429 contracts, and the customer account of Combs, a division of Cunningham Commodities, which issued 414 contracts. Large stoppers included the customer account of Cunningham Commodities, which stopped 668 contracts, the customer account of Man Professional Clearing, which stopped 457 contracts and the customer account of Fortis, which stopped 199 contracts. The last trade assigned was Dec. 4.

 

In other corn news, cash corn prices in China were little changed in the week ended Wednesday limited in part by ideas supplies will increase on next week's sale of government corn reserves, an analyst said. Expectations are that the government will sell at least 2 million metric tonnes from state reserves.

 

Corn futures on China's Dalian Commodities Exchange settled little changed with the benchmark May contract up RMB1 to RMB1,761/tonne.