December 26, 2006

 

CBOT Corn Outlook on Tuesday: Flat-up 1 cent; follow through tech momentum

 

 

Corn futures on the Chicago Board of Trade are seen opening Tuesday's session steady to firm, buoyed by technical buying, with overnight strength in Asian markets providing a directional influence.

 

Analysts expect corn to open flat to 1 cent higher.

 

Carry through buying from Friday's strong technical close should promote upside momentum, as a quiet news front keeps attention on technical features, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

However, futures are expected to remain range-bound, as prices are running into overhead resistance with favorable global weather conditions applying modest pressure to prices, Roose added.

 

Nevertheless, some traders anticipate speculative support to underpin prices, as traders front run an expected bout of speculative index fund buying that emerged in the market in the past two years after the New Year, a CBOT floor analyst said.

 

A market technician said bullish traders have regained solid upside technical momentum heading into the end of the year. The next upside price objective for March corn is closing prices above solid resistance at the contract high of US$3.93 a bushel. Above that lies major psychological resistance at US$4.00 a bushel. The next near-term downside price objective is closing prices below solid support at last week's low of US$3.62.

 

The Commodity Futures Trading Commission said speculative funds were net long 294,233 combined CBOT corn futures and options contracts as of Dec. 19, compared with net longs of 291,875 in the previous week. Meanwhile, commercials are net short 187,041, compared to net shorts of 190,957 contracts in the previous week.

 

On tap for Tuesday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report at 10:00 a.m. CST.

 

U.S. Midwest cash corn basis bids were mostly steady Tuesday, cash traders said. Spot U.S. cash corn bids were down 2 cents in Champaign, Ill., and up 5 cents in Burlington, Iowa.

 

The DTN Meteorlogix weather forecast said an upper level ridge is expected to form over Argentina before moving to southern Brazil later in the weekend. This will promote a period of hot weather but it isn't expected to last more than 3 to 5 days before rain returns.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher. The benchmark May 2007 contract settled RMB11 higher at RMB1,656/tonne, after trading between RMB1,648-RMB1,664/tonne.