June 6, 2006

 

CBOT Corn Outlook on Tuesday: 1-2 cents lower on crop progress, weather

 

 

Corn futures at the Chicago Board of Trade are expected to start open auction style trading 1-2 cents lower Tuesday as Monday's crop progress report, weaker outside markets and favorable near term growing weather are factors expected to weigh on prices, sources said.

 

In overnight e-CBOT trading, July corn slipped 1 1/4 cents to US$2.51 3/4 per bushel and December fell 1 1/2 cents to US$2.77 1/4.

 

There is not much fresh news out but what news out is negative, a commission house analyst said.

 

Monday's crop progress report was in line with expectations and shows the crop to be in excellent shape, he said.

 

The U.S. Department of Agriculture reported that 71% of the U.S. corn crop was in good-to-excellent condition, up one percentage point from last week, meeting market expectations.

 

In Iowa, the largest U.S. corn producing state, 82% of the crop is rated in good-to-excellent condition, up four percentage points from last week.

 

Weaker outside markets, with lower gold, silver and crude oil futures are also not supportive to the market, a floor trader said.

 

Near term weather forecasts remain favorable to crop development with warm temperatures and moisture forecast expected to benefit the crop, he added.

 

Losses could be limited by the influence of the funds and which direction they want to take, a floor analyst said. The crop looks great at this stage, but the influence of the funds will dictate prices, he added.

 

Mostly dry weather is forecast for the western U.S. Midwest Wednesday and early Thursday before scattered thundershowers may develop later Thursday, DTN Meteorologix Weather said. Temperatures are expected to average above normal Wednesday and Thursday.

 

In the eastern U.S. Midwest, scattered to widely scattered thundershowers are expected Tuesday and Wednesday, with possible amounts of .25-1.00 inch possible, DTN Meteorologix Weather said. Mainly dry conditions are expected on Thursday. Temperatures in the period are forecast to average near to above normal.

 

Cash corn basis bids were mixed Tuesday. Central Illinois was unchanged at 11 cents under the July future.

 

On technical charts, first resistance for July corn is seen at US$2.54 and then at US$2.57 3/4, Monday's high. First support is seen at US$2.52, Monday's low and then at US$2.50, a technical analyst said.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the March 2007 contract declining RMB/16 to RMB1,515/tonne.