July 24, 2006

CBOT Corn Outlook on Monday: Steady to 1/2 cent higher start seen

Corn futures are expected to start open auction trading steady to 1/2 cent higher Monday as supportive weather forecasts and ideas last week's declines were overdone and due for a correction are expected to provide support to prices, an analyst said.

In overnight e-CBOT trading, September corn ended unchanged at US$2.37 1/4, with December up 1/4 cent at US$2.53 3/4 per bushel.

The market should be underpinned by the latest weather forecasts, with the U.S. Midwest forecast through early August seen supporting corn prices, an analyst said.

In addition, the market's losses were overdone last week and due for a correction, he added.

Last week, December futures fell over 20 cents on improving weather conditions, a floor analyst noted.

In the western U.S. Midwest, there is a chance for scattered showers and thunderstorms on Tuesday and Wednesday with mostly dry weather Thursday and Friday with mostly dry conditions for the weekend DTN Meteorologix Weather said. Temperatures are expected above normal in the period.

In the eastern U.S. Midwest, scattered showers and thunderstorms are forecast to develop Tuesday and Wednesday continuing into Thursday with rainfall totals of 0.25-1.00 inch expected with locally heavier amounts possible, DTN Meteorologix Weather said. Temperatures are predicted near-to-above normal in the period.

The Commodity Futures Trading Commission reported that large non-commercial traders reduced their short corn futures and options on futures positions by 30,353 contracts and trimmed their long positions by 7,371 contracts and are now net long 211,727 contracts as of July 18. Large commercial traders increased their short positions by 8,755 contracts and their long positions by 5,777 contracts and are now net short 101,176 corn futures and options on futures, the CFTC reported Friday.

On technical charts, prices are short-term oversold technically and due for at least a corrective bounce soon, a technical analyst said. First resistance for December corn is seen at US$2.55, Friday's high and then at US$2.60. First support is seen at Friday's low of 2.51 and then at US$2.50.

Cash corn basis bids were unchanged to mostly higher Monday morning. Central Illinois was unchanged at 8 cents under the September future.

In other corn news, the U.S. Department of Agriculture reported that 221,488 metric tonnes of U.S. corn had been sold to Japan for delivery in the 2006-07 marketing year.

The Korea Feed Association bought 55,000 metric tonnes of U.S. corn from Cargill, a trader in Seoul, South Korea said.

South Korea's Nonghyup Feed Inc. or NOFI, is seeking 165,000 metric tonnes of optional-origin feed corn in a tender to be concluded late Monday, a trader in Seoul said.

China's corn processing industry expects demand for corn to rise by 13.5% in the marketing year ending September 2007 an official at China's National Grain and Oil said.

Corn futures on China's Dalian Commodities exchange settled lower, with March down RMB/21 at RMB/1,382/tonne.

The USDA is scheduled to release the weekly export inspections report at 10:00 a.m. CDT and the weekly crop conditions at 3:00 p.m. CDT.