December 26, 2007

CBOT Corn Outlook on Wednesday: Seen starting 1-2 cents firmer

A firmer start is expected for Chicago Board of Trade corn futures Wednesday, follow modest gains Monday and a price-supportive technical outlook.

Most-active CBOT March corn is called to open 1-2 cents firmer. Electronic trade was shuttered for the Christmas holiday Tuesday and will resume when pit trade does, at 10:30 a.m. EST.

There's little fresh news to guide trade Wednesday, given that most of the world is on extended holiday break and many U.S. traders have likely opted to add another day to Tuesday's day off.

Don Roose, president, U.S. commodities, says there's a little uncertainty in the grain markets as a whole, given the year-end book-squaring and positioning ahead of the annual commodity index rebalancing which will take place in the New Year. That could lend some volatility to trading. "We also wonder how much more new money will come into these markets," Roose said.

There were some showers in both Argentina and Brazil over the past few days and some rain is expected over the next day or two, according to DTN Meteorlogix. The private weather firm said long range charts for Argentina suggest warmer, drier weather to return to the central agricultural belt next week. The dryness in Argentina is supportive, he said.

A technical analyst said March corn futures remain in a strong technical uptrend, but noted momentum appears "a bit toppy" which could signal consolidation or even a minor correction during this shortened week. First resistance for March corn is seen at US$4.44 1/2 and then at US$4.48, the contract high. First support is seen at US$4.38 and then at US$4.31 1/4.

The market will look to the export inspections from USDA, expected around 11 a.m. EST. It's normally not a report with much of a lifespan, but it will give a sign of how business is doing, Roose said. In other export business, South Korea bought 275,000 metric tonnes of U.S. corn last week for a June shipment.

Looking ahead, the market will watch for results from USDA's December hogs & pigs report, due out Thursday. Roose said the report might expose that the amount of feed being used for the domestic livestock industry is understated. He noted last week's cattle on feed report showed placement of cattle into feed lots and current on feed to be higher than a year ago. "We're feeding less efficiently," he said.