December 28, 2005

 

CBOT Corn Outlook on Wednesday: Expected flat, following e-CBOT

 

 

Corn futures at the Chicago Board of Trade are predicted to begin trading Wednesday flat, following the tone set in overnight activity and with traders winding down their operations ahead of the New Year's holiday, sources said.

 

In overnight e-CBOT trading, March corn ended unchanged at US$2.15 1/2 per bushel, May corn also finished the session flat at US$2.24 1/4 per bushel, and July corn slipped 1/4 cent to US$2.32 per bushel.

 

The markets have entered their holiday trading mode, a floor analyst said. There is not much fresh news out and traders are winding down their activity ahead of the New Year's Holiday, he added. However, the market has been strong recently on fund participation, so corn prices will be dictated by what the funds want to do, he noted.

 

March corn futures have rallied over the past seven sessions, reaching levels not seen in over two months as commodity fund activity, thought to be mostly short covering has lifted prices, sources said.

 

Scattered thundershowers occurred in parts of Argentina with some locations receiving up to 1.00 inch of rain in La Pampa. The forecast predicts light scattered showers on Wednesday before turning mostly drier on Thursday and Friday, according to DTN Meteorlogix weather. Mainly dry weather with a few scattered showers is expected over the weekend with temperatures average to above normal, Meteorlogix added.

 

Cash market basis bids are unchanged to lower Wednesday morning. Central Illinois was unchanged at 3 cents over the March future, while St. Louis was 2 cents lower at 4 cents over the March future.

 

On technical charts, a minor bottom has been created on the daily charts for March futures with a series of higher highs and higher lows developing, analysts said. The next upside objective is US$2.20 in March futures, with first resistance pegged at US$2.16 and then at US$2.20. First support is set at US$2.13 1/4 and then at US$2.10.

 

In other agricultural news, cash corn prices in China were higher in the week ended Wednesday as demand for feed increases as bird flu is no longer viewed as a major threat and expectations of an increase in poultry demand by the end of January, traders said.

 

Talk of an increase in export demand also helped underpin prices but Chinese traders believe that domestic factors are the key.

 

Russia is likely to export 12.4 million metric tonnes of grain in 2005-06, compared to 9.1 million tonnes in 2004-05, according to a report released Wednesday by the Russian agrarian market institute. Included in the total are 10.5 million metric tonnes of wheat and 1.5 million tonnes of barley, the institute estimated.

 

Corn futures at China's Dalian Commodity Exchange settled mostly lower, sources said. The most-active September contract fell RMB3 to RMB1,381/tonne.