June 27, 2006

 

CBOT Corn Outlook on Tuesday: Steady-1 cent down on crop progress, weather

 

 

Corn futures at the Chicago Board of Trade are predicted to begin open auction trading steady to 1 cent lower Tuesday following slightly weaker prices overnight and a lack of supportive inputs, sources said.

 

In overnight e-CBOT trading, July corn ended unchanged at US$2.23 per bushel, and December fell 3/4 cent to US$2.48 1/4.

 

Crop conditions increased by three percentage points, a little bit better than expected and the weather is still non-threatening to the crop, a floor analyst said.

 

The U.S. Department of Agriculture reported Monday that 71% of the U.S. corn crop was in good-to-excellent condition, up three percentage points from last week and above the 1-2 percentage point increase expected.

 

Seventy-eight percent of the crop was reported in good-to-excellent condition in Iowa, up four percentage points from last week, while Illinois reported a five percentage point decline in that category to 72% from last week's 77% rating.

 

Trading could be two-sided and choppy as the market is oversold and could see a "dead cat bounce," a commission house analyst said. In addition, the acreage report is due out on Friday and the market could benefit from some position squaring, he added.

 

The 14-day relative strength index in December corn stands at 32.06.

 

In the western U.S. Midwest, mainly dry weather is predicted through Thursday, DTN Meteorologix Weather said. On Friday and Saturday there is a chance for scattered or widely scattered showers. Temperatures are expected to average near to below normal Wednesday and near to above normal Thursday, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, there is a chance for widely scattered showers Tuesday and Wednesday which may favor northern and eastern sections, with mainly dry conditions on Thursday in the region, DTN Meteorologix Weather said. Temperatures are predicted to average below normal Tuesday and Wednesday and near to below normal on Thursday.

 

Cash corn basis bids were unchanged to mostly higher with Central Illinois unchanged at even the July future.

 

On technical charts, prices are in a steep and accelerating five-week-old downtrend on the daily bar chart, a technical analyst said. The market is now short-term oversold, technically and due for an upside bounce soon, he added. First resistance for December corn is seen at Monday's high of US$2.52 and then at US$2.54 3/4. First support is pegged at US$2.47 3/4, Monday's low and then at US$2.45.

 

In other corn news, Taiwan Sugar Corp., TSC has rejected all the bids in its tender to purchase 25,000 metric tonnes of U.S.-origin corn, a Taipei-based trader said.

 

Corn futures on China's Dalian Commodities Exchange settled little changed with the March contract down RMB1 to RMB1,467/tonne.