February 23, 2006

 

CBOT Corn Outlook on Thursday: Mostly steady on overnight trade

 

 

Corn futures on the Chicago Board of Trade are called to open mostly steady following a steady to slightly weaker trade on the overnight electronic platform, sources said Thursday.

 

On the e-CBOT, March corn settled 1/4 cent lower at US$2.21 1/4 a bushel and May corn was unchanged at US$2.32 1/2.

 

Price direction for corn will likely be taken from the trade in wheat and soybeans, which are called to open 2-3 cents lower and mixed, respectively, a trader said.

 

Corn futures fell Wednesday on weak technicals, spillover from lower soybean and wheat prices and concerns over the spread of high pathogenic bird flu and its negative impact on poultry consumption and global feed demand. March corn finished 4 1/2 cents lower at US$2.21 1/2 and May was down 4 1/2 cents to US$2.32 1/2.

 

Traders continue to watch weather developments in Argentina, where showers are providing relief to the stressed crops. The corn crop has been hurt by significant dryness in December and extremely hot temperatures in January. The U.S. Department of Agriculture reduced its production estimate for the country to 15.5 million tonnes, from 16.8 million in January and down from last year's record of 19.5 million tonnes.

 

Argentina received showers and thunderstorms in the last 24 hours, with rain amounts totaling 0.25-1.00 inch in Cordoba, Santa Fe and northern Buenos Aires, DTN Meteorlogix said. Additional showers and storms are seen Thursday, with mostly dry conditions expected Friday through Monday.

 

La Pampa and southern Buenos Aires saw rain amounts of 0.25-1.50 inches in the last 24 hours, with storms continuing Thursday and ending in the evening. Mostly dry conditions are expected Friday through Monday, with light showers possible in southern areas, Meteorlogix said.

 

Temperatures are expected to turn much cooler by Thursday and Friday, with near- to below-normal readings over the weekend.

 

In other news, AccuWeather.com meteorologists said Wednesday that weather conditions over the U.S. Plains are similar to the "Dust Bowl" drought in the 1930s in which cooler-than-normal Pacific waters and exceptionally warm Atlantic waters are weakening and changing the course of a low-level jet stream that normally channels moisture in the Plains. This has resulted in the Plains seeing only 25%-40% of the normal rainfall in the last five to eight months.

 

While the meteorologists said a Dust Bowl drought could occur again, dust storms of that intensity are unlikely due to changes in agricultural production practices.

 

The U.S. government proposed making US$160 million available for the construction of three biorefineries to show that such facilities are financially viable, Energy Secretary Samuel Bodman said. Bodman made the comments Wednesday at Archer Daniels Midland Co's headquarters in Decatur, Ill. ADM is one of the world's largest corn processors and one of the industry leaders in producing ethanol for commercial use.

 

Corn futures on China's Dalian Commodity Exchange fell Thursday on losses in other local commodities and lower CBOT corn futures. The benchmark September 2006 contract lost RMB12 to settle at RMB1,481 a tonne.

 

In export news, the Taiwan Sugar Corp. bought two cargoes of U.S. No. 2 yellow corn and U.S. No. 2 yellow soybeans totaling 53,000 metric tonnes in tenders conducted late Wednesday. TSC bought one corn cargo of 23,000 tonnes from Cargill for March 1-15 shipment from the U.S. Gulf or March 16-30 from the Pacific Northwest. TSC bought another corn cargo of 10,000 tonnes from ADM for shipment either April 11-30 from the U.S. Gulf or April 26-May 15 from the Pacific Northwest.

 

In the U.S. cash market Wednesday, corn spot basis bids were mostly steady to lightly mixed in a few locations.

 

Nearby technical resistance on March corn is met at US$2.26 and US$2.27, then US$2.27 1/2 and US$2.30. Support is uncovered at US$2.24 1/2, US$2.23 1/2, US$2.22 1/4, US$2.20, US$2.17 and US$2.16 1/2.