March 6, 2006

 

CBOT Corn Outlook on Monday: Down 2-3 cents; in step with e-CBOT

  

 

Corn futures on the Chicago Board of Trade is seen beginning the trading week on the defensive, in step with overnight trade amid the bearish influence of Midwest weather and spillover pressure from other grain markets.

 

Analysts expect corn to open 2 to 3 cents per bushel lower.

 

In overnight electronic trading, March corn was 3 1/4 cent lower at US$2.25 1/2, and May corn was 3 1/4 cent lower at US$2.36 1/4 per bushel.

 

The market is poised for a lower start, with weakness centered around improved moisture across the Midwest heading toward the spring planting season and expected spillover pressure from wheat futures, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market has been tracking wheat recently and with moisture moving through the winter wheat belt and news the Iraq only bought a small percentage of wheat from the U.S. in Friday's tender is expected to weigh on wheat futures Monday, Roose added.

 

Meanwhile, traders anticipate a bit of a pull back in corn prices, staging a modest correction, looking for a level that attracts increased demand. However, participants are expected to keep a close eye on commodity funds for signs that they may defend long positions or treat lower price action as a buying opportunity.

 

Nevertheless, weakness in outside inflationary markets as well as the continued spread of bird flu globally is expected to keep a bearish undertone in the market.

 

Technical analysts said market bulls have good upside technical momentum that suggests a challenge of resistance at US$2.50 a bushel soon, but a close below last week's low of US$2.33 will generate some fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.40 - Friday's high-and then at US$2.41. First support is seen at US$2.37 3/4 - Friday's low - and then at US$2.35.

 

Cash corn basis bids were mostly unchanged to lower across the Midwest.

 

DTN Meteorlogix Weather Service said light showers with locally heavier precipitation are expected in Argentina through the middle of this week. Meanwhile, rain was mainly confined to northern and eastern areas of South Africa during the early part of the weekend, with fairly cool Temperatures. Warmer temperatures are needed for this crop to bring it to maturity before the chance for autumn frosts increase, Meteorlogix added.

 

In deliveries, a total of 339 delivery notices were posted against the March future. The primary issuer was the house account at Iowa Grain while the principle stopper was a customer account at ABN Amro with 233 lots. The last date assigned was Feb. 28.

 

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 166,736 lots in corn as of Feb. 28. Commercial firms held net short positions totaling 65,891 lots.

 

On tap for Monday, 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, Poland has identified its first two cases of the H5N1 strain of the bird flu virus, Polish Press Agency reported Monday, citing the National Veterinary Institute in Pulawy. The virus had already hit Poland's neighbors, including Germany, Russia, Ukraine and Slovakia. In addition, tests on two wild swans in northern Greece were positive for the H5N1 strain of bird flu, the Agriculture Ministry said Sunday.

 

In overseas markets, Corn futures China's Dalian Commodity Exchange settled slightly lower on profit-taking from longs amid concerns due to the spread of a deadly strain of bird flu, analysts said. The benchmark September 2006 contract settled RMB11 lower to RMB1,463/tonne.