December 17, 2007

 

CBOT Corn Outlook on Monday: Up 2-3 cents on wheat strength, overnight gains

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 2 to 3 cents higher Monday, boosted by spillover from an expected higher start in wheat futures and follow through from firm prices in overnight activity, an analyst said.

 

In overnight electronic trading, March corn gained 2 1/2 cents to US$4.40 3/4 per bushel. e-CBOT volume in March was 4,512 contracts.

 

Corn will follow the wheat, an analyst said. CBOT March wheat futures traded over the US$10 per bushel level in overnight activity as continued strong demand for wheat around the world is pushing nearby wheat futures higher, the analyst said. CBOT March wheat ended the overnight session at US$10.01 per bushel, up 21 1/2 cents.

 

There isn't much fresh news out to impact the market, but speculators are moving into commodities in general and that is pushing prices higher and leading to more interest in owning commodities, the analyst said.

 

Dry weather concerns in parts of Argentina's corn growing region are also supplying mild support for corn, a trader said.

 

Mainly dry weather is forecast in Argentina through Wednesday with temperatures expected to average above normal Tuesday and Wednesday, with highs possibly reaching to the 90 degrees Fahrenheit level by Wednesday, DTN Meteorlogix Weather said.

 

On daily open auction technical charts, March corn futures hit a fresh contract high and closed at a bullish weekly high close, a technical analyst said. Corn bulls have a solid near-term technical advantage and gained more power Friday, a technical analyst said. The next upside objective is to close prices above solid technical resistance at US$4.50 per bushel with the next downside objective closing prices below solid support at US$4.25.

 

First resistance for March is seen at US$4.40, Friday's open auction contract high and then at US$4.45. First support is seen at US$4.35 and then at US$4.33 1/2, Friday's low.

 

Large commercial traders boosted their short Chicago Board of Trade futures and options on futures positions by 52,083 contracts and added 24,460 contracts to their long holdings and are now net short 459,724 contracts as of Dec. 11, the Commodity Futures Trading Commission reported Friday in the supplemental commitment of traders report.

 

Large speculative traders increased their long positions by 19,838 contracts while adding 7,641 contracts to their short positions and are now net long 187,800 contracts the CFTC said. Index funds added 5,273 contracts to their long positions and trimmed their short positions by 551 contracts and are net long 362,412 contracts, the CFTC said.

 

In other corn news, China's Ministry of Finance said Monday that value-added tax rebates on exports of soybeans, corn, wheat and rice will be canceled effective Thursday.

 

The cancellation of a tax rebate on corn exports "is really bad news for corn in terms of fundamentals and market sentiment," said an analyst for a Chinese grain trading firm.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark May contract up RMB19 to RMB1,755/tonne.