March 14, 2006

 

CBOT Corn Outlook on Tuesday: Down 1/2-1 cent on overnight, technical weakness

 

 

Corn futures at the Chicago Board of Trade Tuesday are called to open slightly lower, based on follow-through selling after Monday's lower trade and weakness in overnight action.

 

Most-active May corn is called to open down 1/2 cent to 1 cent a bushel.

 

In e-CBOT trade, May corn fell 3/4 cent to $2.28 while March fell 1/2 cent to $2.20 a bushel.

 

"We're kind of following the overnight trade, and the Chinese markets were down about 4 cents. There's also some technical weakness," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

A small band of support exists in the $2.27 area, basis the May contract,which could limit the downside. If that region is broken, however, corn could fall to the February lows of $2.25 1/2.

 

Monday's trade in May corn saw prices fall to a $2.28 low and breaking through 40-day moving average support. The contract did manage to hold above the key $2.27 3/4 cycle low set last week, which may be constructive for the market.

 

DTN Meteorologix weather said recent rain and storms have greatly improved soil moisture for the upcoming U.S. planting season. A new system may produce more rain and storms in the region later this weekend and early next week. Average temperatures are expected to be below normal. Average precipitation should be near to above normal.

 

In export news, South Korea bought up to 107,500 metric tonnes of corn. In the tender breakdown, 52,500 tonnes will be Chinese-origin corn while 48,000 to 55,000 will be U.S. origin. The shipment is expected to arrive in South Korea in June.

 

The Philippines' Department of Agriculture said Tuesday it expects higher corn output in the first quarter despite unusually high rainfall that caused flooding in some areas. Production is seen around 1.57 million tonnes from an initial forecast of 1.63 million tonnes.

 

Corn futures on China's Dalian Commodity Exchange closed lower on long liquidation. The September futures fell RMB13 to RMB1,415 per tonne.

 

March futures go off the board at noon Tuesday, which will likely show that "May looks high compared to March on the continuation charts," Roose said.

 

However, he doesn't expect any unusual volatility to result from the expiration, "but we'll watch it as it goes off just to see."