May 15, 2006

 

CBOT Corn Outlook on Monday: Weaker on e-CBOT, metals, energy market

 

 

Corn futures at the Chicago Board of Trade are called to open weaker, pressured by weakness in overnight trade and losses in energy and metals markets.

 

In e-cbot trade, July corn fell 3/4 cents a bushel to US$2.57 1/2.

 

Corn is called 2-3 cents lower.

 

Analysts said given the rally in the grain markets on Friday, corn could be due for a correction. On Friday, July corn rose 11 1/4 cents and December rose 10 1/2 cents. Furthermore, crude oil markets at the New York Mercantile Exchange and precious and base metals at the Comex division of the Nymex are both down sharply.

 

"It's possible the outside markets might be influencing, but we have a little help from the fact that we had a huge day on Friday," said John Kleist of Kleist Consulting in Arlington Heights, Ill.

 

"The market has to wean itself from overbought conditions, plus the market left a big gap on the charts" that might need to be filled, Kleist said.

 

Corn rose sharply Friday after a bullish report from the U.S. Department of Agriculture, which estimated new-crop ending stocks at nearly half the level of the current old-crop stocks.

 

"(Friday's) report makes the market even more sensitive to anything in the way of weather problems. It's going to be in a bit of a rationing mode to make sure we have enough supplies for new-crop," Kleist said.

 

Although Midwest corn and soybeans managed to avoid frost damage during the past weekend, despite a very cool overall temperature trend, said DTN Meteorlogix, wet weather might keep farmers out of the field.

 

"During this week, the stubborn chilly temperatures will continue to slow down crop development, however," DTN Meteorlogix said.

 

They forecast the western corn belt to see mostly dry weather for the last part of the week, with temperatures slowly warming up to near- to above-normal reading. In the eastern corn belt, showers will continue in the region through Wednesday, followed by brief drying before showers resume on Friday into the coming weekend. The rains will inhibit field work and keep early crop development slowed down.

 

Considering that more than 70% of the corn crop has been planted, the wet weather hampering planting is not as much of a concern, floor sources said.

 

Kleist said after Friday's big run up, it's likely that corn could put in a choppy, sideways trade, similar to what happened to the market after the big surprise in the March 31 prospective plantings report.

 

In other news, a total of 619 delivery notices were posted against the CBOT May corn future. The house account at Tenco was the principal stopper of 173 lots. The last trade date assigned was May 12.