June 20, 2006

 

CBOT Corn Outlook on Tuesday: Steady start on lack of fresh inputs

 

 

Corn futures at the Chicago Board of Trade are expected to start pit trading steady to firm Tuesday with the market searching for direction on little fresh overnight news, sources said.

 

In overnight e-CBOT trading, July corn ended unchanged at US$2.29 3/4 per bushel, and December slipped 1/4 cent to US$2.55 1/2.

 

There is not much news out to move the market, a commission house analyst said. The weather remains good in the near term, but activity could be two-sided as the market is oversold and people talk about turnaround Tuesday, he added.

 

December corn's 14-day relative strength index is 35.55.

 

There is little fresh news out Tuesday, a floor source agreed. Monday's corn progress report showed a two percentage point decline in the good-to-excellent category, pretty much in line with what the market expected, a floor analyst said. In Illinois, 77% of the crop was rated in good-to-excellent condition unchanged from the prior week while Iowa's good-to-excellent rating declined by five percentage points from last week.

 

In the western U.S. Midwest, scattered showers and thundershowers are predicted through central and southern locations Wednesday and in the south Thursday, DTN Meteorologix Weather said. Rainfall potential from central Iowa into Missouri is 0.30-1.50 inches, with the heaviest amounts expected in Missouri. Temperatures are expected near to below normal Wednesday and below normal Thursday. Another round of scattered showers and thundershowers is predicted for Thursday and Friday in the region with temperatures expected to average near to below normal, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, scattered showers and thundershowers are forecast to develop north and are expected to spread southward Wednesday and Thursday, with amounts of 0.25-1.00 inch and locally heavier. Scattered showers and thunderstorms are predicted Friday into the weekend favoring the eastern and southern locations, DTN Meteorologix Weather said.

 

Cash corn basis bids were unchanged to higher with Burlington, Iowa, 1 cent higher at 21 cents under the July future.

 

On technical charts, it will take a bullish "weather market" in the coming weeks to revive the bulls, a technical analyst said. He pegs first resistance for July corn at US$2.32, Monday's high and then at US$2.33 3/4, the top of Monday's downside price gap. First support is seen at Monday's low of US$2.29 1/2 and then at US$2.27 3/4.

 

In other corn news, corn futures on China's Dalian Commodities Exchange ended lower on feed consumption concerns as China announced another outbreak in bird flu in China that weighed on the market, sources said. The March contract fell RMB9 to RMB1,459/tonne.

 

South Africa reduced its estimate of 2005-06 corn production to 5.998 million metric tonnes.

 

In June, the U.S. Department of Agriculture's estimated 2005-06 South African corn production at 7.5 million tonnes.