March 8, 2006

 

CBOT Corn Outlook on Wednesday: Steady-down 1/2 cent; following e-CBOT theme

 

 

Corn futures on the Chicago Board of Trade are seen starting Wednesday's open auction session with a steady to lower undertone, following the overnight theme as the market attempts to find its footing in the absence of fresh fundamental news.

 

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

 

In overnight electronic trading, March corn was 1/2 cent lower at US$2.20 1/2, May corn was 1/2 cent lower at US$2.30, July corn was 3/4 cent lower at US$2.40 per bushel.

 

A quiet news front, with big rains coming through the Midwest and firming cash basis levels, should generate a steady opening, said Jack Scoville, analyst with the Price Group in Chicago.

 

However, declines in outside inflationary markets and follow through weakness from Tuesday poor technical close may attract fund related selling to extend the current downward move, traders added. Soil enhancing rains coming through the Midwest is expected to improve early planting prospects and is seen providing underlying pressure.

 

Technical analysts said prices are now down around ten cents from last week's highs and the bears are gaining some fresh downside technical momentum. No serious chart damage occurred Tuesday, but more follow through selling on Wednesday would produce chart damage and a close below technical support at US$2.28 would also provide market bears with some better downside technical momentum.

 

First resistance for May corn is seen at US$2.33 3/4 - Tuesday's high - and then at US$2.35 3/4 - this week's high. First support is seen at US$2.30 and then at US$2.28. Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said rain and thunderstorms across the Midwest will maintain high available soil moisture for wheat while greatly improving the top and sub soil moisture for the upcoming corn and soybean planting season.

 

Rain and possible thunderstorms are forecasted over the next three days, except that rain may change to snow in northern Illinois, Wisconsin and western Michigan before ending Thursday night. Rainfall potential during this period is 0.50-2.00 inches and locally heavier, with good coverage, Meteorlogix said.

 

Meanwhile, analysts surveyed by Dow Jones Newswires anticipate the U.S. Department of Agriculture will increase corn exports and trim ending stock estimates in Friday's supply and demand report. The average of estimates taken from the survey peg corn 2005-06 ending stocks at 2.338 billion bushels.

 

In deliveries, a total of two delivery notices were posted against the March future. A customer account at Man Financial issued the lots with a customer account at Fimat the stopper. The last date assigned was Feb. 28.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled slightly lower on long liquidation on concerns over bird flu, analysts said. The benchmark September 2006 contract settled RMB17 lower to RMB1,439/tonne, after trading between RMB1,430 and RMB1,453/tonne.

 

Cash corn prices in major producing regions of China rose in the week to Wednesday as processors actively bought in anticipation of higher prices, analysts said.

 

Corn production in Zimbabwe is expected to reach about 900,000 metric tonnes from an estimated area of 1.3 million hectares, up from the 2004-05 season, but indications are that the country will still experience a food deficit in 2006, according to a U.S. Department of Agriculture attache report posted on the Foreign Agricultural Services Web site.