Corn Outlook: Up 2-3c On E-CBOT, Outside Markets DOW JONES NEWSWIRES
Corn futures are expected to open 2-3 cents a bushel higher Wednesday on firmer prices overnight and the possibility of the outside markets attracting commodity fund and index-fund buying, sources said.
In overnight e-cbot trade, July corn rose 3 cents to $2.62 and September corn added 3 cents to $2.73.
Wheat and soybean futures are also expected to open higher.
A weak U.S. dollar and higher gold futures point to the possibility of index-fund buying coming into the grain markets, according to Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
"The dominant strength continues to be this switch from food to fuel, so when you have energies higher that pushes us higher psychology-wise. Then on the inflationary side you've got gold higher," reinforcing the bullish mentality, he said.
Crude oil futures were higher in electronic trade but have recently turned slightly lower.
Midwest weather remains cool, but concerns are negligible with forecasts for warmer temperatures next week.
Cool weather will slow crop emergence and development in the western corn belt over the next five days, but no damaging cold is expected. Warmer, beneficial weather will develop over the six- to 10-day period, DTN Meteorlogix said.
Cool to cold weather will continue in the eastern belt for another five to six days before temperatures begin to rise. Again, emergence and development will be slow, but damaging cold is not anticipated.
Meanwhile, corn futures on China's Dalian Commodity Exchange closed mostly higher as some traders rolled positions to the March 2007 contract. The benchmark January contract rose CNY4 to CNY1,468 a ton.
Cash corn prices in China were little changed in the week to Wednesday. Feed demand is recovering but market participants have not seen a substantial rise so far, Dow Jones Newswires reported. Feed processors remained cautious and were not anxious to build stockpiles and farmers were busy planting, a trader said.
China imported its first-ever shipment of genetically modified corn, which arrived at Guangdong province's Huangpu port Tuesday. Chinese experts expect the nation to become a net corn importer, maybe as early as 2007, given the rapid development of industries that use it as raw material and an expanding feed processing industry.
Technically, July corn bulls still have solid upside momentum, and a bull flag or bullish pennant pattern may be forming on the daily bar chart, an analyst said. However, it will take a close above resistance at last week's $2.62 high to provide bulls with better technical momentum. A close below $2.50 support would provide near-term downside momentum for market bears.
First resistance for July corn is seen at $2.62 and then at $2.65. Support is seen at $2.57 and $2.55.
July corn's Relative Strength Index is 74, indicating an overbought market.
-By Tom Sellen; Dow Jones Newswires; 913-322-5177; [email protected]
