March 20, 2006

 

CBOT Corn Outlook on Monday: Down 1/2-1 cent; continuing recent declines

 

 

Corn futures on the Chicago Board of Trade are expected to start the week on the defensive, in continuation of last week's and overnight declines, traders said.

 

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

 

In overnight electronic trading, May corn was 1 cent lower at $2.20 1/2, and July corn was 1/2 cent lower at $2.31 3/4 per bushel.

 

The continuation of speculative long liquidation, technical weakness and favorable Midwest weather providing needed solid moisture ahead of spring plantings have corn futures poised for a lower beginning to the session, said John Kleist of Kleist Agricultural Consulting.

 

Spillover weakness from wheat futures and early losses in outside inflationary markets is expected to aid the defensive theme as well. Nevertheless, the ultimate driver of the market will hinge on what point will liquidation pressure run its course, added Kleist.

 

On the supportive side, recent price declines has provided visible signs of export business as the market is seemingly pricing itself into consumption, Kleist adds. Otherwise, a quiet news front is expected to keep technical influences featured attractions.

 

Technical analysts said near-term chart damage has been inflicted recently and prices are in a steep 2.5-week-old downtrend on the daily bar chart. The market needs to fill the March 6 downside price gap on the daily bar chart to regain upside technical momentum. A close below technical support at Friday's low of $2.20 3/4 would generate even better downside technical momentum.

 

First resistance for May corn is seen at $2.24 and then at $2.25. First support is seen at $2.20 3/4 - Friday's low - and then at $2.18. Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said another major rain event is on tap for the Delta and the lower Ohio River valley with snow or rain through the middle Ohio River valley and the south eastern Midwest. In the western Midwest, there is a chance for snow, 6-12 inches and locally heavier, in Nebraska and western and southern Iowa and northern Missouri Monday.

 

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 149,594 lots in corn as of March 14. Commercial firms held net short positions totaling 36,508 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 demand news, the Korea Feed Association is seeking 180,000 metric tonnes of U.S.-origin feed corn for delivery between June 15 and July 25 in a tender to be concluded on Tuesday, an association official said Monday.

 

Meanwhile, the highly pathogenic H5N1 strain of bird flu has spread to northern Malaysia, authorities said Monday, and two more cases of H5 bird flu have been detected in Afghanistan.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled slightly higher, in step with Chinese soy futures. The most widely held September 2006 contract settled RMB1 higher at RMB1,390/tonne.