February 28, 2006

 

CBOT Corn Outlook on Tuesday: Down 1/2 to 1 cent, e-CBOT, big deliveries

 

 

Corn futures on the Chicago Board of Trade are seen starting Tuesday's session on weak footing, in tune with overnight action, as the market sets back from Monday's late gains with big deliveries adding pressure.

 

Analysts expect corn to open 1/2 to 1 cent per bushel lower.

 

In overnight electronic trading, March corn was 1/2 cent lower at US$2.27, and May corn was 3/4 cent lower at US$2.38 1/4 per bushel.

 

Traders are bracing for a technical correction from Monday's strength, and with heavy deliveries illustrating the abundance of nearby supplies, futures are poised to set back unless speculative buying surfaces to underpin prices, analysts said.

 

The large deliveries were expected, but they serve as an indication that there is no shortage of supplies in the cash pipeline. Lingering concerns over what impact bird flu outbreaks will have on global feed demand is expected to apply mild pressure to prices as well. However, end of the month positioning may promote a choppy atmosphere with floor traders unwilling to push prices in either direction.

 

Meanwhile, outside market indicators are mixed, with gold and silver higher, crude oil down and the U.S. dollar index lower.

 

Technical analysts said market bulls still have technical power after pushing prices to a fresh six-month high close Monday, at US$5.39 basis May futures. The next major upside price objective is US$2.50 a bushel; however a close below last week's low of US$2.30 would provide the bears with some fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.39 1/4--Monday's high--and then at US$2.40. First support is seen at US$2.36 1/2--Monday's low-and then at US$2.34.

 

In deliveries, a total of 2,017 delivery notices were posted against the March future. Principle issuers included the house account at ABN Amro with 992 lots, the house account at Tenco with 408 lots and a customer account at RJ O'Brien issuing 481 lots. The primary stopper was a customer account at O'Connor stopping 1,175 lots. The last date assigned was November 29, 2005.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said Argentina has a chance for periodic shower activity into Friday before turning drier. In South Africa, widespread rain and thunderstorms during the weekend and Monday are on tap. This rainfall may mean flooding for some crop areas. The maize crop would benefit from warmer and drier weather, Meteorlogix added.

 

In news, The H5N1 strain of bird flu has been found in dead birds in the city zoo in Ukraine's port and resort Odessa, the regional veterinary service said Tuesday. The Swedish government Tuesday said it has found cases of the "aggressive" form of bird flu in wild birds in Oskarshamn, Sweden, and Hungary said Tuesday it had found the H5N1 bird flu virus in another swan that died close to Budapest, prompting the authorities to take protective measures.

 

Meanwhile, the U.K. government's chief scientific adviser has said he expects bird flu to arrive in the U.K. and remain for "five years plus," the BBC Web site reports Tuesday.

 

In overseas markets, corn futures China's Dalian Commodity Exchange settled mostly lower on profit-taking, with the benchmark September 2006 contract falling RMB10 to settle at RMB1,472/tonne.