March 29, 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 session modestly higher, following the lead of overnight action amid a lack of fresh news to stimulate significant interest, traders said.

 

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 $2.23, and July corn was 1 cent higher at $2.34 1/4 per bushel.

 

The market is poised for another quiet, sideways session, as participants seem content to even up positions ahead of Friday's planting and stock report and the end of the quarter and month, analysts said.

 

A quiet news front is expected to keep prices confined within its recent trading range, with $2.17 on the bottom and $2.25 the top of the range basis the May future. Otherwise, traders are expected to focus on Friday's U.S. Department of Agriculture reports, with analysts expecting another grinding trend unless fresh fundamental news or aggressive speculative interest surfaces to generate momentum.

 

Meanwhile, favorable pre-planting weather conditions are expected to aid a defensive theme, while underlying demand is seen keeping a floor under prices heading into Friday's reports.

 

USDA is scheduled to release its prospective planting and quarterly grain stock reports Friday 7:30 a.m. CST (1330 GMT). The average estimate of trade projections peg 2006 corn acreage at 80.576 million acres from a range of guesses that span from 80.091 million to 81.000 million. The average of quarterly stock estimates was 6.987 billion bushels from guesses that ranged from 6.942 billion to 7.057 billion.

 

Market technicians say prices are still in a steep four-week-old downtrend on the daily bar chart and a bearish pennant pattern has formed. It will take a close back above technical resistance at $2.28 to generate some fresh upside technical momentum, while a close below technical support at this month's low of $2.17 would provide better downside technical momentum.

 

First resistance for May corn is seen at $2.23--Tuesday's high--and then at $2.24. First support is seen at $2.20 2/3--Tuesday's low-and then at $2.18 3/4--this week's low.

 

In demand news, the Korea Corn Processing Industry Association, or Kocopia, has bought up to 110,000 metric tonnes of optional-origin food grade corn from trading house ADM in a tender concluded Wednesday, an association official said. The purchase will be split into two purchases of Chinese or US origin.

 

U.S. Midwest cash corn basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash corn bids were up 3 cents in Champaign Ill, up 6 cents in Decatur, and down 3 cents in Fort Dodge IA.

 

DTN Meteorlogix Weather Service said mainly dry and breezy conditions will be common today across the western Midwest. A chance for scattered showers and thunderstorms will surface on Thursday, with rain or a mixture of snow lingers over northern areas of the region Friday, with drier conditions common in southern areas. Precipitation should average 0.50-1.50 inches and locally heavier during this period. Temperatures average above normal Wednesday and Thursday, and near to above normal Friday.

 

In the eastern Midwest, a dry outlook is on tap for today and early Thursday. A chance for showers and possible thundershowers emerge Thursday or during Friday, with rainfall averaging 0.25-1.00 inch and locally heavier during this period. Temperatures will average near normal Wednesday, above normal Thursday, and near to above normal Friday, Meteorlogix said.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower on long liquidation. The widely watched September 2006 contract lost RMB9 to RMB1,398/tonne, after trading between RMB1,394 and RMB1,409/tonne.

 

Meanwhile, corn prices in China's major producing regions were little changed in the week to Wednesday and trading remained inactive as processors were reluctant to buy, said analysts. In Jilin, China's largest corn-producing province, the price of average quality corn with little moisture was largely unchanged to be quoted around RMB1,180-RMB1,200 a metric tonne.