April 24, 2007

 

CBOT Corn Outlook on Tuesday: Flat to up 2 cents on lower corn planting pace

 

 

Chicago Board of Trade corn futures are expected to start day session activity flat-to-two cents higher Tuesday, supported by Monday's lower than expected corn planting pace but with the upside limited by medium term forecasts predicting favorable planting weather in the late April-early May period, a floor analyst said.

 

In overnight electronic trading, May corn gained 1/2 cent to US$3.52 3/4 per bushel, July slipped 3/4 cent to US$3.63 1/4 and December rose 2 1/2 cents to US$3.71. e-CBOT volume in July was 7,130 contracts.

 

Corn trading will be choppy and two-sided, a floor analyst said. Planting progress was below expectations, but the forecast for later in the month predicts weather conducive to planting, the analyst added.

 

In Iowa and Illinois - the largest corn producing states - planting was well behind the pace set last year as well as the five-year average. Eight percent of the corn crop in Iowa was reported planted through Sunday April 22, well below the 23% sown last year and the five-year average of 18%. In Illinois, 13% of the crop had been seeded, compared to 29% in 2006 and the five year-average of 37%.

 

Right now the key is the weather in the first two weeks of May, a floor trader said. The forecast is favaorable for that time periond and the market is saying that the corn will be planted on time, the trader added.

 

Corn could trade to the upside but the market could be impacted by wheat futures, a commission house analyst said. The wheat crop progress report was better than anticipated and that is expected to pressure wheat on the open, the commission house analyst added.

 

In the western U.S. Midwest, rain and possible thundershowers will reach all of Nebraska, much of Iowa and all of Missouri Tuesday and Wednesday with amounts averaging .50-2.00 inches and locally heavier amounts possible, DTN Meteorologix Weather said. The rain may linger into Thursday in eastern areas of the region on Thursday, while temperatures are expected to be near-to-below normal.

 

In the eastern sections of the region, there is a chance for widespread rain and thunderstorms Wednesday into Thursday, with rainfall averaging .75-to-2.00 inches during this period. Temperatures are expected to average near-to-below normal Wednesday and Thursday.

 

In the 6-to-10 day outlook, temperatures are expected to average above normal with rainfall near-to-below normal.

 

On daily technical charts, July corn gapped open lower on the daily bar chart Monday as good planting weather over the weekend and dry and warm weather in the extended forecast were bearish, a technical analyst said. Trading should remain choppy in the near term between the April low of US$3.55 1/2 and the April high of US$3.93.

 

First resistance for July is seen at US$3.67 1/2 Monday's high and then at US$3.69 3/4. First support is pegged at US$3.61 and then at US$3.55 1/2.

 

In other corn news, Argentina reopened the export registry for 3 million metric tonnes of corn, Agriculture Secretary Javier de Urquiza said Monday. The registry had been closed since November, due to large export commitments.

 

Argentina is expected to produce 22 million metric tonnes of corn in 2006-07 according to estimates from the U.S. Department of Agriculture.

 

The impact of this year's drought on South Africa's corn crop won't be as bad as earlier feared the farm group Grain South Africa said Tuesday. A larger amount of irrigated acres has helped lessen the impact of drought, the group said.

 

Corn futures on China's Dalian Futures Exchange settled little changed with the September contract unchanged at RMB1,643/tonne.