April 17, 2006

 

CBOT Corn Outlook on Monday: Up 3-4 cents on better-than-expected rain

 

 

Corn futures at the Chicago Board of Trade are expected to start Monday's pit-trading session 3-4 cents higher on heavier- than-expected rain over the weekend and following the tone set in overnight electronic trading, sources said.

 

In overnight e-CBOT trading, May corn rose 4 1/2 cents to US$2.40 3/4 per bushel, July gained 3 1/4 cents to US$2.51 3/4, and December increased 4 3/4 cents to US$2.73 1/4.

 

"The rain is recharging the subsoil moisture, which down the road is going to be helpful, but short-term, the market is focused on buying the acres and the need to plant it early," said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

Any time you jeopardize the planting you put risk premium back in the market, he added.

 

In addition, outside markets are sharply higher and are leading to inflationary fears, he noted. Both silver and gold futures were sharply higher in early trading.

 

After rainfall of .30-1.50 inches in parts of the western U.S. Midwest over the weekend, mainly dry conditions are forecast for the western U.S. Monday, before showers and thunderstorms develop on Tuesday and Wednesday, DTN Meteorlogix Weather said. Much of the region will see .25-1.00 inch with .50-1.50 inches possible in the Dakotas and parts of Minnesota. Temperatures are expected to average below normal west and above normal east Monday and below normal Tuesday and Wednesday.

 

In the eastern U.S. Midwest, light rain or drizzle may remain over the eastern portion of the region with mostly dry conditions elsewhere. Mainly dry conditions return on Tuesday with a chance for light showers on Wednesday, DTN Meteorlogix weather said. Temperatures are predicted above normal Monday and Tuesday, near normal in the north and above normal in the south on Wednesday, DTN Meteorlogix Weather added.

 

On technical charts, if bulls can push July through the April high of US$2.55 that would suggest another solid run-up in prices, a technical analyst said. He pegs first resistance at US$2.50 and then at US$2.53. First support is seen at Thursday's low of US$2.46 1/2 and then at US$2.44 3/4.

 

The Commodity Futures Trading Commission reported Friday that large non-commercial traders increased their net long corn futures and options on futures positions by over 39,000 contracts to 179,051 contracts as of April 11.

 

In other corn news, the Korean Corn Processing Industry Association, or Kocopia, has bought a total of 110,000 metric tonnes of Chinese, U.S. or South American-origin corn from Glencore in a tender concluded Friday, an association official said Monday.

 

Of the total, 55,000 tonnes of Chinese corn will be supplied at US$142.49 per tonne and 55,000 tonnes of U.S. or South American-origin corn will be supplied at US$152.49 per tonne, the official said.

 

Taiwan's Member Feed Industry Group, or MFIG, is seeking 60,000 metric tonnes of U.S. origin-corn in a tender to be concluded Tuesday, a Taipei-based trader said Monday.

 

Prices of corn delivered to Asia in the week ahead may move higher or lower, depending on weather conditions for the U.S. crop, sources in Asian said.

 

Corn futures on China's Dalian futures exchange settled higher on spillover from stronger soybean futures, analysts said. The January contract ended RMB16 higher at RMB1,397/tonne.