May 31, 2006

 

CBOT Corn Outlook on Wednesday: Seen 2-4 cents lower on crop ratings, weather

 

 

Corn futures at the Chicago Board of Trade are expected to start open outcry trading 2-4 cents lower after Tuesday afternoon's crop conditions report and weather forecasts favorable to crop development, floor sources said.

 

In overnight e-CBOT trading, July corn declined 4 cents to US$2.50 1/2 per bushel and December fell 4 1/4 cents to US$2.75 1/2.

 

The crop conditions were better than expected with 70% of the corn in good-to-excellent condition, a commission house analyst said.

 

It's also the end of the month and there could be some position squaring from the speculative interests and that could make for a choppy, two-sided trade, he added.

 

The market is still an all fund market and the market will do what the funds want to do, a floor analyst said. Beyond the conditions, there isn't much news out Wednesday morning, the analyst noted.

 

The U.S. Department of Agriculture reported Tuesday afternoon that 70% of the U.S. corn crop was in good-to-excellent condition, four percentage points higher than last week. Analysts had expected a gain of 1-to-2 percentage points.

 

In Iowa, 78% of the crop was rated in good-to-excellent condition, 10 percentage points higher than a week ago.

 

In the western U.S. Midwest, there is a chance for scattered showers and thundershowers, in the south and north, with mainly dry conditions in central areas on Wednesday. Mainly dry weather is forecast on Thursday and Friday, DTN Meteorologix Weather said. Temperatures are expected to average near to above normal.

 

In the eastern U.S. Midwest, there is a chance for scattered showers and thundershowers, with amounts of 0.25-1.00 inch Wednesday and Thursday. Mainly dry weather returns to the region on Friday, DTN Meteorologix Weather said. Temperatures are expected to average near to above normal in the period.

 

On technical charts, first resistance for July corn is seen at US$2.56 and then at US$2.57 3/4, Tuesday's high, a technical analyst said. First support is seen at US$2.53 1/4, Tuesday's low and then at US$2.52.

 

In other corn news, cash corn prices in China rose slightly in the week ended Wednesday as declining stocks and increased feed demand led to more buying from traders and processors, sources said.

 

Corn futures on China's Dalian Commodities Exchange settled lower on profit taking, sources said, with the benchmark March 2007 contract falling RMB12 to RMB1,534/tonne.