December 20, 2006

 

CBOT Corn Outlook on Wednesday: 2-3 cents higher on follow through, e-CBOT

 

 

Chicago Board of Trade corn futures are expected to begin trading 2 to 3 cents higher Wednesday, as follow through buying from Tuesday gains and spillover strength from stronger prices in overnight electronic trade is expected to support prices, sources said.

 

In overnight e-CBOT trading, March corn rose 3 cents at US$3.76 per bushel and May gained 2 1/2 cents to US$3.83 1/4. e-CBOT volume in March was 2,996 contracts.

 

The rally that began during Tuesday's session and carried over into overnight trade should support corn futures at the opening, a floor source said.

 

Crude oil is higher and inflationary expectations are turning up which is supportive to the market, a commission house analyst said.

 

Corn has been oversold in the near-term and the rally that began in Tuesday's trade should continue, he adds. The funds were strong buyers and should continue to support their positions. Technically, the market is trading near the upper end of its recent range and should be well supported, the analyst said.

 

On day session open auction technical charts, March corn trading has been choppy and should remain that way until the end of the year, a market technician said. The bulls continue to have the near term technical advantage, with their near term price objective closing March corn above US$3.80. On the downside the bears' near-term downside objective remains closing prices below the week's low of US$3.62.

 

First resistance for March corn is seen at US$3.75, and then at US$3.78. First support is pegged at US$3.70 and then at US$3.65 1/2.

 

Cash corn basis bids were mixed Wednesday with Central Illinois unchanged at 3 cents under the March future.

 

In other corn news, India's government may consider removing the import duty on corn, but there are no plans to ban corn exports, the Indian agriculture minister said Wednesday.

 

The minister said there is a shortage of corn but noted that planting is still going on and production may rise on the year.

 

Corn prices in China were little changed in the week ended Wednesday after the domestic futures market eased and market participation began to cool following talk that the government might auction additional corn stocks, sources said.

 

Israel purchased 56,000 metric tonnes of U.S. corn and Taiwan purchased 60,000 metric tonnes of U.S. corn, sources said.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark May contract settling up RMB/16 at RMB 1,617/tonne.