February 14, 2006

  

CBOT Corn Outlook on Tuesday: Steady to down 1 cent; in step with e-CBOT

  

 

Corn futures on the Chicago Board of Trade are seen starting Tuesday's session with a steady to weaker feel, following the overnight tone amid the absence of fresh market moving news.

 

Analysts expect corn futures to open steady to 1 cent per bushel lower.

 

In overnight electronic trading, March corn was 1 cent lower at US$2.19 3/4, and May corn was 1 cent lower at US$2.30 1/4 per bushel.

 

The market is set to continue its corrective mode from prior gains, with bearish supply side fundamentals remerging from the shadows in the absence of aggressive speculative fund buying in recent sessions, analysts said.

 

Follow through selling from Monday and technical weakness are seen as featured attractions, unless commodity funds step up to support prices. Traders anticipate choppy activity, as mixed signals from outside inflationary markets are not expected to edge prices in either direction.

 

Nevertheless, good underlying demand is seen providing mild support to prices. However, the market is heavily weighted to the long side, setting up the opportunity for lower price action.

 

Market technicians said last week's high of US$2.36 3/4 basis the May contract is still solid technical resistance for futures to overcome. A close below US$2.25 would provide market bears with fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.31 3/4--Monday's high--and then at US$2.35. First support is seen at US$2.30 and then at US$2.29--Monday's low.

 

Cash corn basis bids were mostly unchanged Tuesday morning.

 

DTN Meteorlogix Weather Service said no significant rain is on tap for Argentina for the next 5-7 days. No significant hot weather is seen for a 3 day period but it may turn hot late this week or during the weekend. Long range charts continue to suggest a cold front will move through early next week, bringing thundershowers and then cooler weather.

 

In Brazil, the best chance for showers during a 5 to 7 day period is from Parana northward. Rio Grande Do Sul may experience a few light showers during the week with temperatures near to above normal. Long range charts suggest a chance for scattered thundershowers and cooler temperatures by the middle of next week. Meanwhile, less rainfall and warmer temperatures during the week will favor maize crops in South Africa, Meteorlogix added.

 

In news, Seoul-based Korea Corn Processing Industry Association, or Kocopia, will seek up to 110,000 metric tonnes of optional-origin, non-genetically modified corn in a buy tender Wednesday, a Seoul-based trader said Tuesday. Kocopia will buy two cargoes of optional-origin non-GMO corn for human consumption, to arrive at the port of Incheon May 25 and the other to arrive at the ports of Ulsan and Kunsan June 5. Suppliers can choose to provide either two 52,500-tonne cargoes from China, or two 55,000-tonne cargoes from the U.S. or South America, the trader said.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mostly higher. The benchmark September 2006 contract rose RMB1 to settle at RMB1,462/tonne, after trading between RMB1,456/tonne and RMB1,468/tonne.