March 13, 2006

 

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

  

 

Corn futures on the Chicago Board of Trade are expected to begin Monday's open auction session on the defensive, in step with overnight losses with favorable pre-planting rains casting a cloud over upside movement.

 

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

 

In overnight electronic trading, March corn was 3 1/2 cents lower at US$2.22 1/2, May corn was 3 cents lower at US$2.31 1/2, and July corn was 3 1/4 cents lower at US$2.41 3/4 per bushel.

 

The market is poised to start lower on improved top and sub soil moisture in the corn belt following weekend rains, with weakness in wheat futures potentially adding pressure as well, said John Kleist, of Kleist Agricultural Consulting.

 

Lingering concerns over bird flu issues and the bearish psychology associated with talk of mad cow disease and its impact on feed demand is seen weighing on prices as well.

 

However, solid underlying export demand is seen limiting downside pressure as the global spread of bird flu has not negatively impacted U.S. corn exports, said Kleist. Meanwhile, futures are expected to find good meaningful support at US$2.30 to US$2.28 3/4 basis May futures, he added.

 

Technical analysts said May corn's charge higher for the second session in a row Friday is encouraging to market bulls, but the market stalled at major gap resistance and traders will need to monitor action around that zone carefully. Gap resistance comes in at US$2.35 3/4-US$2/37 3/4, from March 3-6. The market would need to close above that gap to reignite a dominant bull trend.

 

First resistance for May corn is seen at US$2.35 3/4--Friday's high--and then at US$2.37 3/4. First support is seen at US$2.32 1/2 and then at US$2.30--Friday's low. Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said recent rain and storms across the Midwest greatly improved soil moisture for the upcoming planting season. Severe weather during the weekend probably affects only isolated fields.

 

Analysts said the weekend rains will go a long way in improving Midwest soil moisture and will put planting concerns on the back burner.

 

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 155,268 lots in corn as of March 7. Commercial firms held net short positions totaling 51,567 lots.

 

The CFTC report was fairly neutral with the decrease in net speculative longs expected, said Kleist.

 

In deliveries, a total of 53 delivery notices were posted against the March future. The primary issuer was a customer account at FCStone with 51 lots. The house account at Term Commodities stopped 18 lots. The last date assigned was March 3.

 

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 overseas markets, corn futures China's Dalian Commodity Exchange settled slightly lower on long liquidation, continuing its downward trend. The most widely held September 2006 contract settled RMB7 lower at RMB1,428/tonne, after trading between RMB1,425/tonne and RMB1,433/tonne.