June 21, 2006

 

CBOT Corn Outlook on Wednesday: Seen 1/2-1 cent higher on consolidation

 

 

Corn futures at the Chicago Board of Trade are expected to begin open auction trading 1/2-1 cent higher Wednesday as the market consolidates after recent price weakness, floor sources said.

 

In overnight e-CBOT trading, July corn rose 1/2 cent to US$2.30 1/4 per bushel, and December gained 1/2 cent to US$2.56 1/2.

 

The news is quiet overnight, there is lots of moisture around in the U.S. Midwest and the outside markets are quiet as well, a floor analyst said. However, the market has been weak during the last two weeks and is oversold, he added.

 

The market should consolidate after the recent price weakness a commission house analyst said. It could have a little bounce back, with a two-sided trade likely, he added. Market direction could also be set by the commodity trading funds and what they want to do, he noted.

 

December corn futures have declined 29 cents since June 2, as favorable growing weather throughout much of the Midwest has reduced a weather premium, sources said.

 

In the U.S. Midwest, west of the Mississippi River, scattered showers and thundershowers with amounts of .25-1.00 inch and locally heavier are forecast for Wednesday and Thursday in southern Nebraska and southern Iowa, DTN Meteorologix Weather said. Mainly dry conditions are expected Friday. Temperatures are expected to average near to above normal.

 

In the 6-to-10 day period, temperatures are expected to average near to above normal and precipitation near to below normal.

 

In the U.S. Midwest east of the Mississippi River, scattered showers and thundershowers are expected in northern and central areas Wednesday and Thursday, and in the south later Thursday and into Friday, with rainfall averaging .30-1.00 inch and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average above normal Wednesday, near to above normal Thursday and near to below normal Friday, DTN Meteorologix Weather said.

 

In the 6-to-10 day period, Temperatures are forecast to average near to below normal and rainfall near to below normal except in the south which could possibly see near to above normal rainfall, DTN Meteorologix Weather said.

 

Cash corn basis bids were unchanged to higher with Central Illinois, unchanged at 2 cents under the July future.

 

On technical charts, it will take a close above US$2.40 in July to provide the bulls with fresh technical momentum, a technical analyst said. First resistance is seen at US$2.32, this week's high and then at US$2.33 3/4, the top of a downside price gap on the daily bar chart. First support is pegged at US$2.27 3/4 and then at US$2.25.

 

In other corn news, cash corn prices in China were little changed in the week ended Wednesday as supply and demand are roughly in balance, sources said. Farmer stocks have been sold out, but processors have already stockpiled corn in advance, an analyst said.

 

Corn futures on China's Dalian Commodities Exchange ended mostly higher with the March contract gaining RMB16 to RMB1,475/tonne.