December 12, 2007

 

CBOT Corn Outlook on Wednesday: Down 2-4 cents; minor profit taking correction

 

 

Corn futures on the Chicago Board of Trade are expected to begin Wednesday's day session on weaker footing, easing back on trade positioning squaring after Tuesday's rally.

 

Analysts expect corn to open 2 to 4 cents lower.

 

In overnight electronic trading, December corn was 3 1/2 cents lower at US$4.03, and March corn was 3 cents lower at US$4.21.

 

Profit taking is the early theme, following the overnight trend, with traders eyeing outside markets and neighboring grain and oilseed futures in the absence of any significant fresh fundamental news, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

The market rallied Tuesday, but world markets didn't follow and that signal is opening the door for traders to book profits, analysts added.

 

Nevertheless, supportive underlying demand, a weaker U.S. dollar and spillover from other grains and oilseeds are expected to influence direction during the course of the day, a CBOT floor analyst said.

 

Otherwise, traders anticipate some corn/wheat spreading to surface as the markets stage a minor correction from recent price moves.

 

A technical analyst said stochastics and the relative strength index are overbought but remain bullish, signaling that sideways to higher prices are possible near-term. If the March contract extends this fall's rally, the 87% retracement level of this summer's decline crossing at 4.26 1/2 is the next upside target. Closes below the 20-day moving average crossing at 4.04 1/4 would confirm that a short-term top has been posted.

 

First resistance is Tuesday's high crossing at 4.25 then the 87% retracement level of the June-July decline crossing at 4.26 1/2. First support is the 75% retracement level crossing at 4.14 1/4 then the 10-day moving average crossing at 4.10 1/4.

 

The U.S. Department of Agriculture announced Wednesday private export sales of 113,792 metric tonnes of corn for delivery to Japan in the 2007-08 marketing year.

 

December corn deliveries totaled 2,488 lots. Issuers and stoppers were scattered among various commission houses. Customer accounts at Man Professional Clearing were the issuers and stoppers of 543 lots and 496 lots respectively. Customer accounts at Cunningham Commodities were issuers and stoppers of 364 lots and 280 lots respectively. The last trade date assigned was December 11.

 

The DTN Meteorlogix weather forecast said a cold front moving in this Friday and Friday night in Argentina will produce a few thunderstorms but with low coverage. Crops continue under some stress in the western growing areas due to dryness and periodic hot conditions, Meteorlogix added.

 

In other news, China plans to sell 500,000 metric tonnes of corn from state reserves Dec. 18 to stabilize market prices, the National Grain & Oil Trade Center said Wednesday. This will be the second batch of corn China will sell, after it sold 238,100 tonnes of corn from its state reserves Tuesday, or 48% of the 500,000 tonnes it planned to sell.

 

South Africa's corn yields for the 2007-08 season rose by 11,000 metric tonnes to 6.006 million tonnes last week, the South African Grain Information Service said Wednesday. The yields are slightly more than one million tonnes short of the 7.125 million tonnes total production projected for the season.

 

Meanwhile, China's cash corn prices were mostly stable in the week ended Wednesday, but prices in some regions were lower, with more supplies entering the market.