June 7, 2006

 

CBOT Corn Outlook on Wednesday: 1/2-1 cent lower on follow through selling

 

 

Corn futures at the Chicago Board of Trade are called to open 1/2-1 cent lower Wednesday on follow through liquidation, sources said. Lower precious metals and energy markets could also limit speculative buying interest, they added.

 

In overnight e-CBOT trading, July corn fell 1/2 cent to US$2.47 1/4 per bushel and December also slipped 1/2 cent to US$2.73.

 

The market should continue to follow the recent trend of weak long liquidation, a commission house analyst said.

 

July corn has declined 11 3/4 cents since last Friday's close.

 

The outside markets are lower and the dollar is higher, which could limit the upside; however the market could see the start of some position evening before the U.S. Department of Agriculture supply and demand reports this Friday, a floor source said.

 

The average of 14 analysts surveyed by Dow Jones Newswires estimates 2005-06 corn ending stocks at 2.204 billion bushels, 22 million lower than estimated by the USDA in May.

 

The average analyst estimate of 2006-07 corn ending stocks is 1.221 billion bushels, 80 million bushels above the 1.141 billion the USDA projected in May.

 

Near term weather forecasts remain conducive to crop development and are also likely to keep a lid on prices, a floor trader said.

 

In the western U.S. Midwest, mainly favorable weather for developing corn during the next 10 days is expected, with hotter weather confined t the western sections of the region, DTN Meteorologix Weather said

 

In the eastern U.S. Midwest, corn and soybean development will benefit from warmer temperatures and scattered rainfall over the next 10 days, DTN Meteorologix Weather said.

 

Cash corn basis bids were unchanged to mostly higher Wednesday. Central Illinois was unchanged at 11 cents under the July future.

 

On technical charts, July corn prices are now at the bottom of a choppy trading range bound by the May high of US$2.63 1/2 and Tuesday's low of US$2.47 1/2, a technical analyst said. The direction in which prices break out of this range is likely to be the direction of the next major move in prices, the analyst noted. He sees first resistance for July corn at US$2.50 and then at US$2.51. First support is pegged at US$2.47 1/2 and then at US$2.45.

 

In other corn news, the USDA announced a sale of 108,712 metric tonnes of corn to Japan for the 2005-06 marketing year.

 

Cash corn prices in China rose in the week ended Wednesday on increasing feed demand and industrial use, analysts said.

 

Corn futures on China's Dalian Commodities Exchange ended slightly lower with the March 2007 contract slipping RMB/9 to RMB1,506/tonne.