May 8, 2006

CBOT Corn Outlook on Monday: Seen 2 cents lower on weather, outside markets

 

Corn futures at the Chicago Board of Trade are forecast to begin pit trading 2 cents lower Monday as favorable planting weather over the weekend and forecasts for good weather in the upcoming week are expected to weigh on prices at the opening, sources said.

 

Lower prices in outside markets also are expected to add to the weak tone, they added.

 

In overnight e-CBOT trading, July corn fell 2 1/4 cents to $2.38 1/4 per bushel and December corn declined 2 3/4 cents to $2.61 1/4.

 

The weather over the weekend was conducive to planting and the forecasts for this week calls for rain which should benefit the crop, a floor analyst said.

 

In addition, precious metals futures are lower and that could lessen investor's interest in the markets today, he added.

 

In the western U.S. Midwest light to moderate showers, .25-.75 inch and locally heavier are forecast for the southern and eastern areas Monday before dry weather returns on Tuesday, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, scattered showers and thunderstorms with amounts of .25-1.00 inch and locally heavier are expected Tuesday into Wednesday, DTN Meteorologix Weather said. Mainly dry weather is forecast on Thursday and Friday.

 

Large non-commercial traders increased their long corn futures and options on futures by 8,213 contracts while adding to their short positions by 5,198 contracts as of Tuesday, May 2, the Commodity Futures Trading Commission reported Friday.

 

Large non-commercial traders are now net long 207,589 contracts.

 

Deliveries posted against the May contract totaled 2,569 contracts. Issuers included the customer account of Dowd Wescott Group, which issued 446 contracts, the customer account of Man Financial, which issued 544 contracts and the house account of Shatkin, which issued 288 contracts.

 

Stoppers included the customer account of Man Financial, which stopped 406 contracts, the Dowd Westcott Group, which stopped 290 contracts and the customer account of Dorman Trading which stopped 616 contracts.

 

On technical charts, a close below last week's low of $2.38 3/4 would provide bears with better near-term downside technical momentum, a technical analyst said. First resistance for July corn is seen at $2.42 and then at Friday's high of $2.44. First support is seen at Friday's low of $2.40 and then at $2.38 3/4.

 

In other corn news, the 2005 South African corn crop is currently estimated at 6.2 million metric tonnes compared to the 2004 crop of 11.7 million, according to a report on the U.S. Department of Agriculture's Foreign Agricultural Service web site. The decrease in production is due to a 38% reduction in total area planted in an effort to balance supply and demand the report said.

 

Philippine corn production is expected to increase 11% on the year, according to Agriculture Secretary Domingo Panganniban.

 

Provided with good weather, the crop could reach 5.9 to 6 million metric tonnes, he said.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the January contract up RMB/10 higher at RMB 1,444/tonne.

 

Monday morning the USDA is scheduled to release the weekly export inspections at 10:00 a.m. CDT.