July 5, 2006

 

CBOT Corn Outlook on Wednesday: Mixed on uncertain weather outlook

 

 

Corn futures at the Chicago Board of Trade are predicted to begin open auction trading mixed Wednesday as conflicting weather forecasts are expected to foster 2-sided trading at the opening, floor sources said.

 

In overnight e-CBOT trading, July corn fell 3/4 cent at US$2.42 1/2 per bushel and December ended unchanged at US$2.68 1/2.

 

The weather outlook is mixed, a commission house analyst said. It is favorable for growing conditions over the next few days but after that the forecasts are mixed, he added.

 

July is the month when the U.S. corn crop as enters its key pollination stage.

 

There was little news out overnight so the trade could be two-sided, a floor source said.

 

Monday afternoon, the U.S. Department of Agriculture reported that 68% of the U.S. corn crop was in good-to-excellent condition, three percentage points lower than the previous week. Analysts noted that this decline was expected and should have little impact.

 

In the major growing states, Illinois slipped 2 percentage points in the good-to-excellent category to 70%, and Iowa slipped one percentage point to 77% in the good-to-excellent category from 78%.

 

In the western U.S. Midwest, mainly dry conditions are forecast over the next five days with a few light showers on Sunday, DTN Meteorologix Weather said. Temperatures are predicted to average below normal Wednesday, near to below normal Thursday and near to above normal Friday.

 

In the 6-to-10 day outlook, temperatures are expected to average above normal and precipitation near to below normal, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, mainly dry weather is forecast over the next several days with the chance for widely scattered thundershowers during Sunday, DTN Meteorologix Weather said. Temperatures are expected to average below normal early in the period with rainfall near to below normal northwest and near to above normal southeast, DTN Meteorologix Weather said.

 

Deliveries posted against the July contract Wednesday were 1,596 contracts. The customer account of the USA Trading division of Man Financial issued 306 contracts and the customer account of Cunningham Commodities also issued 306 contracts while the customer account of ABN Amro stopped 296 contracts.

 

On technical charts, bulls have regained solid upside technical momentum recently in December with the upside price objective closing prices above solid technical resistance at US$2.75, a technical analyst said. First resistance for December corn is seen at US$2.70, Monday's high and then at US$2.72. First support is pegged at US$2.65 and then at US$2.62.

 

In other corn news, corn prices in China were mostly unchanged in the week ended Wednesday despite an increasing number of feed processors substituting wheat instead of corn in their production, traders said.

 

Corn futures on China's Dalian Commodities Exchange ended lower on weaker cash values and sluggish feed demand with the March contract down RMB13 to RMB1,462/tonne.