January 10, 2006

 

CBOT Corn Outlook on Tuesday: Higher on e-CBOT, short covering

  

 

Corn futures at the Chicago Board of Trade are forecast to open 1 to 2 cents higher Tuesday morning as a firm tone in overnight activity and short covering are expected to provide support to the market, floor sources said.

 

In overnight e-CBOT trading, March corn rose 2 cents to US$2.13 per bushel, May corn gained 1 3/4 cents to US$2.22 1/4, and July corn added on 1 1/2 cents to US$2.30 1/2 per bushel.

 

The market should start out higher on short covering after Monday's losses and ahead of Thursday's reports, a floor analyst said. It's turn around Tuesday, but there is still rain in the forecast for Argentina later this week, there is little fresh news out and the grain reports on Thursday are not expected to be friendly to the market, he added.

 

On Thursday, the U.S. Department of Agriculture will release the annual crop production, quarterly grain stocks, supply/demand and winter wheat seeding reports at 7:30 a.m. CST.

 

Commodity trading funds were active on the close Monday and the market will follow what they want to do, a commission house broker said. The tone of the market will follow their lead, he added.

 

Widely scattered showers and thunderstorms are forecast over the next two days in Argentina with scattered shower and thunderstorms expected in the period from Thursday-Sunday, DTN Meteorlogix weather said. Rainfall totals for the time frame will be from 1/2 to 2 inches with locally heavier amounts expected, Meteorlogix added.

 

Cash corn basis bids were mixed Tuesday morning. Central Illinois was unchanged at 3 cents over the March, with St. Louis also unchanged at 4 cents over the March.

 

In technical trading, it will take a move above US$2.13 1/2 to fill on the upside the downside gap and repair the chart damage that occurred Monday, a technical analyst said. The next downside objective for the bears is closing below US$2.08, with first resistance for March corn seen at US$2.12, Monday's high and then at US$2.13 1/2. First support is pegged at US$2.09 3/4, Monday's low and then at US$2.08.

 

In other corn news, the French state grains board, Office National Interprofessionnel des Cereales or ONIC, estimated that the 2005-06 French corn crop would be 14.353 million metric tonnes, up from the December estimate of 14.152 million metric tonnes.

 

Corn futures traded on China's Dalian Futures Exchange settled mostly lower Tuesday, with the most active September contract down RMB4, ending at RMB1,385/tonne.