December 6, 2006

 

CBOT Corn Outlook on Wednesday: Seen 3-5 cents lower on weaker e-CBOT

 

 

Chicago Board of Trade corn futures are forecast to begin day session activity 3-to-5 cents lower Wednesday as lower prices in overnight trade and year-end position evening is expected to weigh on prices, sources said. In overnight e-CBOT trading, December corn lost 3 3/4 cents to US$3.62 1/2 per bushel and March fell 3 3/4 cents to US$3.74 1/4. e-CBOT volume in March was 4,298 contracts.

 

The market was unable to build on Tuesday's late gains in overnight activity and corn should reflect this in Wednesday's session, a floor source said. In addition the dollar is higher and the outside markets are weaker, he added.

 

Based on the recent volume, it appears that the commodity trading funds are starting to wind down their operations ahead of year end and people who have profits are starting to liquidate some of their positions ahead of the holidays, a floor analyst said.

 

On day session open auction technical charts, no serious chart damage has occurred recently and the bulls still have the technical advantage in the corn market a technical analyst said.

 

First resistance for March corn is seen at US$3.80 and then at US$3.82, this week's high. First support is seen at Tuesday's low of US$3.71 1/4 and then at US$3.68. Deliveries posted against the December contract totaled 795 contracts Wednesday. Large issuers included the house account of FC Stone, which issued 314 contracts, and the customer account of Fortis, which issued 400 contracts. Large stoppers included the customer account of Bank of America Securities, which stopped 222 contracts; the customer account of FC Stone, which stopped 200 contracts and the customer account of the Astro division of UBS, which stopped 131 contracts. Preliminary open interest in December is 18,453 contracts. The last trade assigned was Nov. 22

 

Corn basis bids were mixed Wednesday morning. Peoria, Illinois was down 1 cent at 3 cents under the December future.

 

In other corn news, cash corn prices in China were stable in the week ended Wednesday as rising demand from traders and warehouses was offset by increased farmer selling towards year-end, Chinese analysts said.

 

China's National Grain and Oil Information Center said Wednesday that the country's 2007 corn production will probably increase 2.1% to 145 million metric tonnes. Expected good economic returns based on recent price increases is boosting the outlook, the government-backed think tank said.

 

Strong global demand for corn from the ethanol sector and China's rising domestic use will likely shrink available supplies in 2007 and help keep prices high in 2007, Asian corn buyers said Tuesday.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB/9 at RMB 1,567/tonne.