January 31, 2006

 

CBOT Corn Outlook on Tuesday: Steady to 1/2 cent lower on consolidation

 

 

Corn futures at the Chicago Board of Trade are expected to begin trading steady to 1/2 cent lower Tuesday as the market consolidates after recent strength and the lack of fresh inputs, floor sources said.

 

In overnight e-CBOT trading, March corn slipped 1/4 cent to $2.17 1/2 per bushel, May corn ended unchanged at $2.27 3/4 and July corn rose 1/4 cent to $2.36 3/4.

 

Corn should begin steady to easier to start, a floor analyst said. There isn't much news out and with the market searching for fresh news, it should consolidate after the recent strength, he said.

 

It could be a turn around Tuesday type of session, a floor trader said. Precious metals are higher, but the market will be looking for any updates in Argentina's weather outlook to help provide support, he said.

 

Scattered showers to widely scattered showers are expected over the next several days in Argentina with temperatures normal for the period, DTN Meteorlogix weather said. Longer term, additional scattered thundershowers are possible next week, Meteorlogix added.

 

Cash corn basis bids were unchanged to mostly lower Tuesday morning. Central Illinois was unchanged at 3 cents over the March; with St. Louis 1 cent lower at 3 cents over the March future.

 

On technical charts, Monday's rally to four-month highs is strong technical overhead resistance for the bulls to overcome, a technical analyst said. First resistance for March corn is pegged at $2.20 and then at $2.21, with first support seen at Monday's low of $2.16 3/4 and then at $2.15.

 

According to preliminary volume and open interest figures released by the CBOT Tuesday morning, corn open interest set another record on Monday, with open interest at 957,725 contracts, up 18,316 contracts.

 

In other corn news, prices of grains delivered to Asia may increase in the week ahead due to good demand from Japan and South Korea as well as expectations of higher U.S. corn and wheat futures prices, overseas sources said.

 

Corn imports by Asian buyers are expected to pick up in the next few weeks as traders in Japan and South Korea cover their April and May requirements, the sources added.

 

In China, the Dalian futures exchange remains closed this week due to the Lunar New Year holiday. Trading will resume on Feb. 6.