March 30, 2006

 

CBOT Corn Outlook on Thursday: Seen mixed; sideways ahead of USDA

 

 

Chicago Board of Trade corn futures are seen starting Thursday's open auction session with a mixed undertone, as the market remains contained in a sideways pattern heading into Friday's U.S. Department of Agriculture reports.

 

Analysts expect corn to open 1/2 cent higher to 1/2 cent lower.

 

In overnight electronic trading, May corn was 1/4 cent higher at $2.24 1/2, and July corn was 1/4 cent lower at $2.35 1/4 per bushel.

 

Futures are set for a steady start, but continue to maintain adequate underlying support amid commercial pricing beneath the market and the rebuilding of speculative longs as evidenced by the increase in open interest over the past few trading days, said John Kleist of Kleist Agricultural Consulting.

 

Nevertheless, a lack of fresh fundamental news to direct prices is expected to promote a choppy atmosphere, with end of the month and pre-report positioning remaining featured attractions. Meanwhile, a solid demand base, and the anticipation of lower corn acres are seen as supportive features that should help futures shrug off beneficial pre-planting Midwest rains, Kleist adds.

 

In addition, traders say the supportive influence of higher outside markets, with metals and energy futures higher may attract speculative buying.

 

Technical analysts say a bearish pennant pattern still could be forming on the daily chart, but more gains this week would negate that pattern. It will take a close back above technical resistance at $2.28 to provide some fresh upside technical momentum. 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 $2.25--Wednesday's high - and then at $2.26. First support is seen at $2.22 2/3 - Wednesday's low - and then at $2.20.

 

The USDA said 2005-06 corn weekly export sales totaled 1,038,900 metric tonnes, 14% above the previous week and 6% above the prior four-week average. Major buyers include South Korea, in for 262,800 tonnes, Mexico, buying 178,300 tonnes, and 178,000 tonnes sold to unknown destinations. 2006/07 marketing year sales of 106,900 tonnes were to Japan. Trader expectations ranged from 900,000 to 1,100,000 tonnes.

 

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.

 

U.S. Midwest cash corn basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash corn bids were up 4 cents in central Illinois, down 2 cents in Peoria, and down 2 cents in Fort Dodge, Iowa.

 

DTN Meteorlogix Weather Service said showers, thunderstorms and rain will move across the western Midwest Thursday and early Friday. Rainfall should average 0.30-1.50 inches during this period, before dry conditions return late Friday and early Saturday. Showers and thunderstorms may develop late Saturday or during Saturday night. Temperatures will average above normal Thursday and near to above normal Friday and Saturday.

 

In the eastern Midwest, mainly dry conditions are expected Thursday, but scattered showers and possible thundershowers will emerge overnight into Friday. Showers may linger in southern areas and far north Saturday. Rainfall during this period should average 0.25-1.00 inch and locally heavier. Coverage will be 60-70%. Temperatures are forecast to be average to above normal Thursday and Friday in the eastern Midwest, near to below normal in the northern Midwest and above normal in the southern Midwest Saturday, Meteorlogix adds.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mixed, after range-bound trading. The most widely held September 2006 contract settled RMB1 higher at RMB1,399/tonne.

 

In other news, the Russian federal food quality watchdog Rosselkhoznadzor officially confirmed Thursday the presence of the deadly H5N1 strain of bird flu in the Volgograd region of Russia. Meanwhile, the U.S. government's leading bird-flu scientist is more worried about the deadly virus arriving by plane than by fowl.

 

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said he is worried less about a migrating bird coming here, infecting the chickens and chickens infecting people than he is about a virus that might evolve someplace else on the globe and get here on a jet plane carrying a sick passenger.