June 13, 2006

 

CBOT Corn Outlook on Tuesday: 2-4 cents lower on weather, outside markets

 

 

Corn futures at the Chicago Board of Trade are predicted to start open auction trading 2-4 cents lower Tuesday as increased chances for moisture in the longer term forecasts and sharply lower outside markets are expected to pressure corn at the opening, sources said.

 

In overnight e-CBOT trading, July corn retreated 3 3/4 cents to US$2.43 3/4 per bushel and December declined 4 cents to US$2.69 1/2.

 

The market is weather sensitive right now and the latest forecast indicates the potential for more moisture, a floor trader said.

 

The weather gods give it on Monday and take it back on Tuesday, a commission house analyst said. In additiona, gold and silver are sharply lower and crude oil is also posting heavy losses, adding to the negative tone in commodities in general, he added.

 

A weak upper level disturbance is forecast in the 6-to-10 day period, which could be the focus for increased thunderstorm activity, DTN Meteorologix Weather said. Compared to Monday, this has increased the odds for thunderstorms in the east plains, the delta and the southern U.S. Midwest.

 

In the western U.S. Midwest, mainly dry conditions are forecast through Friday with only isolated light showers possible early in the period, DTN Meteorologix Weather said, Temperatures are forecast to average near to above normal early and above normal dry late in the period. In the 6-to-10 day outlook precipitation is forecast near normal.

 

In the eastern U.S. Midwest, dry conditions are forecast over the next five days with only a few light showers early in the period, DTN Meteorologix Weather said. Temperatures are forecast near to below normal Tuesday and Wednesday and near to above normal Thursday and Friday. In the 6-10 day forecast precipitation is expected near to below normal, DTN Meteorologix Weather said.

 

Monday afternoon's crop progress ratings were as expected and should have little impact, a floor source said. The U.S. Department of Agriculture reported that 70% of the U.S. corn crop was in good-to-excellent condition, down one percentage point from last week.

 

Analysts had expected the corn conditions to come in steady to down two percentage points.

 

In Iowa, the largest U.S. corn producing state, 79% of the crop as in good-to-excellent condition, compared with 82% last week.

 

Cash corn basis bids were unchanged to lower Tuesday. Central, Illinois was unchanged at 8 cents under the July future.

 

On technical charts, it will take a close above resistance at Monday's high of US$2.51 1/4 to provide bulls with fresh upside technical momentum, a technical analyst said. First resistance for July corn is seen at US$2.50 and then at US$2.51 1/4. First support is seen at US$2.45 and then at US$2.42.

 

In other corn news, Taiwan's Members Feed Industry Group, of MFIG is seeking 56,000-60,000 metric tonnes of U.S. origin in a render to be concluded Wednesday, a Taipei based trader said Tuesday.

 

Corn futures on China's Dalian Commodities Exchange settled slightly lower with the March contract falling RMB13 to RMB1,496/tonne.