June 8, 2006

 

CBOT Corn Outlook on Thursday: 1-2 cents lower on outside markets, e-CBOT

 

 

Corn futures at the Chicago Board of Trade are expected to begin open auction trading 1-2 cents lower Thursday as lower outside markets, weaker prices overnight and position evening before Friday's USDA reports are expected to weigh on prices, sources said.

 

In overnight e-CBOT trading, July corn declined 1 3/4 cents to US$2.49 1/4 per bushel and December fell 2 cents to US$2.74 3/4.

 

Corn could follow the lead of the outside markets, a floor analyst said. Crude oil, silver and gold are all lower and the dollar is higher on news that al-Qaida terrorist Zarqawi was killed overnight, he added.

 

The market was weak overnight on the lack of fresh news and the weaker metals and this morning's export sales were lousy, a commission house analyst said.

 

The U.S. Department of Agriculture reported weekly corn export sales totaled 914,600 metric tonnes, which included 47,400 tonnes for delivery in 2006-07.

 

Analysts had expected sales between 800,000 and 1.0 million metric tonnes. This was the first time in six weeks that sales were below 1.0 million tonnes.

 

The market could draw some support from any follow through buying from Thursday, but without it, prices will follow the overnight trade and people might want to even up their positions ahead of Friday's USDA reports, a floor trader said.

 

On Friday, the USDA is scheduled to release the monthky supply and demand reports.

 

The average of 14 analysts surveyed by Dow Jones 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.

 

The weather near term continues to be supportive of crop development, another commission house analyst noted.

 

In the western U.S. Midwest, scattered showers and thundershowers may favor the north Thursday and Friday and the south on Saturday, with rainfall averaging .25-1.00 inch and coverage 60-80 percent DTN Meteorologix Weather said. Temperatures are forecast to average near to above normal Thursday, near to below normal Friday.

 

In the eastern U.S. Midwest, there is a chance for scattered showers to develop west and north on Friday and east and south on Saturday, with rainfall expected to average .10-.50 inch and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average below normal north and near normal to above normal south on Friday and below normal Saturday.

 

Cash corn basis bids were mixed Thursday. Peoria, Illinois was unchanged at 21 cents under the July future.

 

On technical charts, July corn reached a 4-week low on Wednesday and then rebounded higher with Wednesday's low now seen as strong near-term technical support, a technical analyst said. First resistance for July corn is pegged at US$2.51 3/4 and then at US$2.54. First support is seen at US$2.47 1/2 and then at US$2.44 1/2, Wednesday's low.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled slightly higher with the March 2007 contract rising RMB/4 to RMB1,510/tonne.