August 7, 2006

 

CBOT Corn Outlook on Monday: Seen 2-3 cents lower, on overnight trade, soy

 

 

Corn futures are predicted to begin day session trading 2-to-3 cents lower, following the tone in soybeans and the theme established in overnight activity, sources said.

 

In overnight e-CBOT trading, September corn fell 2 1/4 cents to US$2.42 3/4 per bushel and December declined 2 3/4 cents to US$2.59 1/2. Volume in December in e-CBOT overnight trade was 8,226 contracts.

 

The market should start weaker, a commission house analyst said. There were better than expected rains in parts of the western U.S. corn belt over the weekend and the forecast for this week is not as threatening for the crop, he added. Spillover weakness from expected declines in soybeans will also weigh on prices, he added.

 

The generally favorable conditions will weigh on the market, said John Kleist of Kleist Ag Consulting in Arlington Heights, Ill. The U.S. Department of Agriculture releases its crop production estimates on Friday and the consensus seems to be it will be a little bit bigger of a crop, possibly a little bit bigger than the last USDA estimate. The market is in the early stages of moving from a supply outlook to a demand outlook, he added.

 

In the western U.S. Midwest, scattered showers and thundershowers with amounts .10-.75 inch and locally heavier are expected from southern Iowa into Missouri on Monday, DTN Meteorologix Weather said. Mainly dry conditions are forecast Tuesday into Wednesday with scattered showers returning Wednesday night into Thursday and Friday.

 

Temperatures are expected to average near normal to below normal through Tuesday and near to above normal to above normal later in the period.

 

In the eastern U.S. Midwest, there is a chance for widely scattered thundershowers with amounts .10-.50 inch and locally heavier Monday and Tuesday, with mainly dry weather Wednesday. Scattered to widely scattered showers and thundershowers are possible Thursday and Friday, DTN Meteorologix Weather said.

 

Temperatures are forecast near to above normal early in the period and above normal late in the period.

 

Large speculative traders increased their short corn futures and options on futures positions by 12,037 contracts and are now net long 202,919 contracts as of Aug. 1, the Commodity Futures Trading Commission reported Friday.

 

Commercial traders reduced their short holdings by 5,313 contracts and trimmed their long positions by 1,918 contracts and are now net short 92,789 corn futures and options on futures.

 

On technical charts, the bears near-term downside price objective in December corn remains closing prices below US$2.58, a technical analyst said. The next upside price level for bulls is closing prices above last week's high of US$2.65 3/4. First resistance for December corn id pegged at US$2.65 3/4 and then at US$2.68. First support is seen at US$2.60 1/2, Friday's low and then at US$2.58.

 

Cash corn basis bids were mostly unchanged Monday morning. Central Illinois was unchanged at 14 cents under the September future.

 

In other corn news, feed demand in China continues to be weak, nearly 20% below normal levels, with one analytical firm, Shanhai JCI Ltd anticipating bumper corn and wheat crops which could lead to an increase in exports in these crops, they noted.

 

South Korea's Nonghyup Feed Inc. or NOFI, purchased 195,000 metric tonnes of optional-origin corn in a tender concluded Friday, a Seoul-based trader said.

 

Corn futures on China's Dalian Commodities exchange ended mostly lower with May 2007 down RMB/6 at RMB/1,399/tonne.

 

Monday morning at 10:00 a.m. CDT, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report and at 3:00 p.m. the weekly crop conditions.