March 21, 2006

 

CBOT Corn Outlook on Tuesday: Flat-down 1 cent; in step with overnight theme

 

 

Corn futures on the Chicago Board of Trade are expected to start Tuesday's session with a steady to easier undertone, following the overnight theme as buyers remain cautious in the face of heavy speculative selling that has been a constant in the market recently.

 

Analysts expect corn to open flat to 1 cent per bushel lower.

 

In overnight electronic trading, May corn was 1/4 cent lower at $2.18, and July corn was 1/4 cent lower at $2.28 1/2 per bushel.

 

Continued speculative selling has shaped the market over the past couple of weeks, and with improved pre-planting conditions across the Midwest, bird flu worries and damage inflicted on technical charts, downside momentum is a dominant force, analysts said.

 

Ample nearby supplies is another bearish feature deterring aggressive buying, with softer outside inflationary markets early Tuesday adding to the defensive theme. However, traders are on guard for signs of exhausted selling pressure with good underlying export demand potentially attracting fresh buying interest, said a CBOT commission house broker.

 

Technical factors are expected to remain dominant features amid a lack of market moving fundamental influences amid a quiet news front.

 

Market technicians said more near-term chart damage was inflicted Monday, with prices in a steep 2 1/2-week-old downtrend on the daily bar chart. It will take a close back above resistance at $2.30 basis May futures to provide fresh upside technical momentum. A close below technical support at Monday's low of $2.17 would provide the bears with even better downside technical momentum.

 

First resistance for May corn is seen at $2.20 and then at $2.21 3/4--Monday's high. First support is seen at $2.17--Monday's low--and then at $2.15. Cash corn basis bids were mostly unchanged to firmer 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 through the central portion of the eastern Midwest. In the western Midwest, snow fell on Monday, overnight and will continue early today in eastern Nebraska, western and southern Iowa and northern Missouri, Meteorlogix said.

 

In demand news, the Korea Feed Association bought 220,000 metric tonnes of U.S.-origin feed corn from trading house Cargill in a tender concluded Tuesday, said an official with the association. The company bought four panamax cargoes of 55,000 tonnes each. 110,000 tonnes of the corn will be delivered to Inchon port between May 15 and June 18, the rest will be delivered in Inchon between June 14 and July 13.

 

South Korea's Members Feed Industry Group, or MFIG, is seeking 60,000 metric tonnes of U.S.-origin corn for May-June delivery in a tender to be concluded on Wednesday, a group official said Tuesday.

 

Meanwhile, top U.S. administration officials on Monday predicted that the deadly H5N1 avian influenza strain will likely be found entering the U.S. as early as this year. However, the officials stressed the Asian strain of H5N1 is still a bird disease, and human-to-human transmission of the disease hasn't occurred.

 

Lab tests have confirmed Pakistan's first two cases of the deadly H5N1 strain of bird flu in chickens in the country's northwest, the government said Tuesday.

 

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