February 21, 2006

 

CBOT Corn Outlook on Tuesday: Seen 1/2-1 cent lower, in step with e-CBOT

 

 

Corn futures on the Chicago Board of Trade are seen starting Tuesday's session slightly lower, in tune with overnight action, as concerns over the spread of bird flu overseas applies mild pressure, traders said.

 

In overnight electronic trading, March corn was 1/2 cent lower at US$2.26, and May corn was 1/2 cent lower at US$2.36 3/4 per bushel.

 

The overnight theme should promote a slightly lower start, with concerns over the expanding bird flu outbreaks possibly cutting world feed demand generating light pressure to prices, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

However, the trade will keep an eye on expected strength in the neighboring wheat market for support amid sales of U.S. wheat to Iraq, he added.

 

Meanwhile, higher outside inflationary markets, with gold, silver and crude oil all higher may provide underlying support. Nevertheless, abundant U.S. corn supplies should limit upside potential with traders watching export sales for signs of a slow down in demand amid the number of reported bird flu reports overseas.

 

Market technicians said May corn futures gained solid upside technical momentum on Friday and their next upside price objective is to challenge psychological resistance at US$2.50 a bushel. A close below last week's low of US$2.27 1/2 would provide the bears with fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.37 3/4 - Friday's high - and then at US$2.40. First support is seen at US$2.34 1/4 - Friday's low - and then at US$2.31.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

USDA said private exporters reported Tuesday, sales of 106,000 metric tonnes of U.S. corn for delivery to Mexico in the 2005-06 marketing year.

 

DTN Meteorlogix Weather Service said very hot and mainly dry weather will continue into Wednesday in Argentina, stressing filling corn. Thunderstorms with some locally heavy rain will help to ease stress to crops later Wednesday or during Thursday. This will be an important system as hot and dry weather during the past week has reduced available soil moisture and increased stress to crops.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 131,388 lots in corn as of Feb. 14.

 

On tap for Tuesday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CST (1600 GMT).

 

In news, an E.U. laboratory in the U.K. has confirmed that a wild swan found dead in southern Austria last week was infected with the deadly H5N1 strain of bird flu, a veterinary official said Tuesday. Meanwhile, health workers in western India expanded a massive slaughter of chickens Tuesday to contain the deadly H5N1 bird flu virus, while Malaysia began killing birds after reporting its first case of the disease in more than a year. In addition, the World Health Organization said Tuesday, the spread of a deadly bird flu strain in Nigeria has yet to cause any confirmed human cases of the disease, but it could still easily infect people.

 

South Africa's National Crop Estimates Committee Tuesday said it expects farmers to produce 6.21 million metric tonnes of corn in the 2005-06 season, sharply lower than 11.45 million tonnes produced in the previous season. U.S. Department of Agriculture currently projects South Africa's crop at 7.5 million metric tonnes.

 

China's Ministry of Agriculture has received the final documents that it requires from foreign firms seeking to import genetically modified corn, said a ministry official Tuesday. The official at the Genetically Modified Food Safety Office didn't state the possible origins of such imports.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled slightly lower, still facing downward correction pressure as spot market prices are still below futures levels, analysts said. The benchmark September 2006 contract edged down RMB1 to settle at RMB1,479/tonne, after trading between RMB1,472/tonne and RMB1,488/tonne.