March 22, 2006

 

CBOT Corn Outlook on Wednesday: Up 1/2-1 cent following overnight theme

 

 

Corn futures on the Chicago Board of Trade are seen starting Wednesday's open auction session on firm footing, following the overnight theme and with expected spillover buying support from Tuesday's strong technical close.

 

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

 

In overnight electronic trading, May corn was 3/4 cent higher at $2.24 1/4, and July corn was 3/4 cent higher at $2.35 1/4 per bushel.

 

A quiet news front is seen keeping attention on technical factors, with traders on guard for a continuation of the large speculative fund activity that buoyed futures late Tuesday, analysts said.

 

Commodity funds were estimated buyers of 19,000 contracts Tuesday, helping futures bounce back after consecutive trading days that produced fund selling in the neighborhood of 50,000 lots. The volatile fund activity is expected to keep traders on edge, poised to pounce on the market on signs that follow through buying won't emerge.

 

Otherwise, the market has few fundamental drivers, with abundant supplies, improved pre-planting conditions and bird-flu concerns factored into prices. Outside market influences are mixed, opening the door for prices to stabilize if aggressive fund activity subsides, traders said.

 

Technical analysts said prices are still in a steep 2.5-week-old downtrend on the daily bar chart. It will take a close back above resistance at $2.30 to provide fresh upside technical momentum. A close below technical support at this week's low of $2.17 would generate even more downside technical momentum.

 

First resistance for May corn is seen at $2.24 - Tuesday's high - and then at $2.25. First support is seen at $2.22 and then at $2.20. Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said colder temperatures are on tap for the eastern Midwest during next couple of days, but soil moisture is adequate to surplus in southern areas and mostly adequate in northern areas. In the western Midwest, snow is on tap Sunday and early Monday for eastern Nebraska, western and southern Iowa and northern Missouri.

 

In demand news, Taiwan's Member Feed Industry Group, or MFIG, has bought 60,000 metric tonnes of U.S.-origin corn from trading house Agrex in a tender concluded Wednesday, a group official said. The corn will arrive in Taiwan either May 6-20 if it's shipped from the U.S. Gulf or May 21-June 4 if it's shipped from Pacific Northwest.

 

The Korea Feed Association's Pusan branch bought 55,000 metric tonnes of optional-origin corn for May-June delivery in private negotiations with trading house Cargill concluded late Monday, an association official said Wednesday.

 

Meanwhile, cash corn prices in China's major producing regions were little changed in less active trading in the past week, amid a balanced market. Large processing enterprises have bought their fill and farmers aren't keen to sell, with only a small pool of stocks left, analysts said.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled higher, as short-covering drove up nearby contracts while long position holders began to roll their positions into forward months. The most widely held September 2006 contract settled RMB15 higher at RMB1,405/tonne.

 

In other news, initial tests conducted on dead chickens from the Gaza Strip indicate the deadly H5N1 strain of bird flu has spread to Gaza, the first outbreak of the disease in the Palestinian territories, Israel's Agriculture Ministry said Wednesday.

 

Health authorities carried out Afghanistan's first chicken culling Wednesday since an outbreak of the deadly bird-flu virus was confirmed in the war-ravaged Central Asian nation earlier this month, an Agricultural Ministry official said.