March 15, 2006

 

CBOT Corn Outlook on Wednesday: Flat-down slightly as market pauses

 

 

Rains in the Corn Belt, overnight weakness and a dearth of fresh news are expected to weigh on Chicago Board of Trade corn futures for Wednesday's session, traders and analysts said.

 

Most-active May corn is called to open steady to 1/2 cent weaker.

 

May corn in e-CBOT trade fell 1/4 cent to $2.31 1/2 and July corn was unchanged at $2.41 3/4.

 

"I think the market is just going to catch its breath," said Doug Harper, analyst at Brock Associates in Milwaukee.

 

A bearish trade Monday followed by early weakness and a price reversal on Tuesday may set the market up for a quiet start to the trading day, he said.

 

Corn traders also are expected to keep an eye on the wheat market, "which has just gotten hammered this week" on improving moisture over the Plains.

 

Wheat futures are called to open mostly steady, while soybeans are seen open steady to slightly lower.

 

Meanwhile, DTN Meteorologix weather service said another system of moisture is expected to bring more rain and/or snow to the eastern Midwest by the end of the week, which should recharge soil moisture ahead of spring planting.

 

Corn managed to close firmer on Tuesday and posted an outside day higher on the daily technical charts, which one technician said is modestly bullish. Still, they point out given recent weakness, "short-covering and profit-taking are not a surprise," the technician said.

 

Traders also are curious to see if any further activity comes from the index fund arena. Fund Deutsche Bank on Monday bought an estimated 3,000-4,000 December contracts to support the market. On the flip side, commodity fund Calyon Financial sold about 3,000 May.

 

Because May corn remains under major gap resistance from $2.35-$2/37 3/4, and bulls have not been able to move closer to that region, the market could be seeing a minor top on the daily chart at the March 3 $2.40 high. Support is seen at $2.29 1/2, then $2.25.

 

Corn futures on China's Dalian Commodity Exchange rose slightly on gains in the CBOT market. September rose RMB2 to RMB1,417 a tonne.

 

Cash corn prices in China fell slightly in the week to Wednesday on slower processor buying. As processor demand subsides, prices in the major producing regions are less likely to rise, traders said.

 

In news, Indian authorities plan the slaughter of about 75,000 chickens in four villages where an outbreak of H5 bird flu was found. Tests were still being conducted to determine whether the infected chickens had the deadly H5N1 strain of the virus.

 

A laboratory in the E.U. confirmed Wednesday that dead birds found in Sweden had been infected with the deadly bird flu strain.

 

Afghanistan officials said Wednesday they are 99% certain that the country's first bird flu outbreak is the H5N1 strain, after receiving results from preliminary tests. Further tests are expected to confirm the outbreak, the Associated Press reported.