February 15, 2006

 

CBOT Corn Outlook on Wednesday: Steady to lower; lacks supportive news

  

 

Corn futures on the Chicago Board of Trade are expected to start Wednesday's session with a steady to lower undertone, in tune with overnight trade amid the absence of supportive news, traders say.

 

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

 

In overnight electronic trading, March corn was 1/2 cent lower at US$2.18 1/4, and May corn was unchanged at US$2.29 per bushel.

 

The absence of fresh fundamental news is seen keeping the market in a corrective mode, as the speculative fund buying that supported prices previously has seemingly moved to the sidelines, analysts said.

 

Technical-inspired activity is expected to play a key role, with mixed tones in outside inflationary markets failing to provide definitive direction for the market.

 

Technical analysts said last week's high of US$2.36 3/4 is still solid overhead technical resistance for the may corn to overcome, and a close below US$2.25 would provide the market with fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.31 - Tuesday's high - and then at US$2.35. First support is seen at US$2.27 1/2 - Tuesday's low - and then at US$2.25.

 

The liquidation of March positions heading toward first notice day Feb. 28 is seen as a key ingredient, with traders watching options activity ahead of Friday's expiration of options on March futures. The market continues to garner underlying support from dryness concerns in Argentina and the recent surge in export sales.

 

However, with a projected 2.4 billion bushel carryout and speculative fund buying moved to the sidelines, it will be tough to muster upside momentum, said a CBOT commission house broker.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said no significant rain is expected in Argentina during the next five to seven days. Temperatures will turn hotter, and long range charts suggest a chance for scattered or widely scattered thundershowers and cooler temperatures for next Wednesday.

 

In Brazil, there is a chance for showers in Rio Grande Do Sul during the next 24-48 hours, more than was expected yesterday at this time. Meanwhile, less rainfall and warmer temperatures during the week will favor maize crops in South Africa, Meteorlogix added.

 

In news, production of the eight major grains and oilseeds in Canada in the upcoming 2006/07 (August/July) crop year is expected to be smaller than the level achieved during 2005/06, according to updated supply/demand tables released by the market analysis branch of Agriculture and Agri-Food Canada for the new crop year. The eight major grains and oilseeds include canola, flaxseed, soybeans, wheat, oats, barley, corn and rye.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mixed. The benchmark September 2006 contract rose RMB3 to settle at RMB1,465/tonne, after trading between RMB1,456/tonne and RMB1,479/tonne.

 

Meanwhile, cash corn prices in major producing regions of China were flat but higher in major consumption areas in the week ended Wednesday, compared with the week ended Jan. 27. Although processors have begun resuming operations, trading in the country's northeastern producing regions hasn't returned to pre-holiday levels, as farmers celebrated the Lunar New Year holidays until the end of last week, traders said.