August 21, 2006

 

CBOT Corn Outlook on Monday: Steady to firmer following overnight

 

 

Corn futures at the Chicago Board of Trade are expected to trade steady to firmer Monday, supported by a modestly firmer overnight trade.

 

Most active is called to open steady to 1 cent firmer.

 

In e-cbot trade, December corn was modestly up 1/2-cent higher at US$2.36 1/4 a bushel. Volume was light.

 

Don Roose, president, U.S. Commodities, said the trade is "starved for information," and will likely focus very closely on this week's 2006 John Deere/Pro Farmer Midwest crop tour, an annual event since 1993. The tour will cover the eastern and western corn belt and look at corn yields.

 

In the eastern part of the tour, crop scouts will pay special attention to the maturity level of this year's corn crop, as that factor could still greatly determine potential yields, said tour director Chip Flory.

 

Expectations are for a fairly mature corn crop in the east. On Monday the eastern leg will sample acreage in western Ohio/eastern Indiana.

 

In the west, crop scouts are expected to find corn crops stressed by hot and dry weather. There has been little evidence of disease or insect problems, although in the last 20 days ideal conditions exist for disease, he said. South Dakota will be the first day's tour.

 

The USDA presently projects a U.S. corn crop of 10.976 billion bushels, down 1.3% from 2005. Yields are forecast to surpass 2005 levels by a wide degree in Illinois, Indiana and Ohio, hold steady in Iowa, and decline by 14 bushels an acre in Minnesota.

 

"Even though the tour is not always accurate, people want more information on what yields are," Roose said.

 

DTN Meteorolgix weather firm said in the Midwest, the weather pattern continues to favor corn development, as rain chances will be mixed with warmer periods during the next 10 days.

 

Weather remains very benign and will help with crop development, analysts said.

 

CBOT December corn's firmer close Friday was deemed tepid short covering in a bear market as prices again Friday poked to a fresh contract low. Bears are in control still, with the near-term downside price objective is closing prices below US$2.25. The next major upside price objective for the bulls is filling the Aug. 11 downside price gap on the daily chart, which is US$2.55 1/2. First resistance for December corn is seen at US$2.36 and then at US$2.38 1/2. First support is seen at US$2.33 1/2 and then at US$2.30.

 

South Korea 110,000 metric tonnes of U.S.-origin corn for a late November arrival. "We do hope for some export business," one analyst said. The recent break in prices is spurring ideas importers might step up their buying interest.

 

Argentina's farmers completed 99% of the 2006/2006 corn harvest as of Thursday, the Agriculture Secretariat reported Friday. The Secretariat has estimated 2005-06 corn production at 14 million metric tonnes, down from 20 million tonnes a year ago, when excellent weather lifted yields to record levels. The U.S. Department of Agriculture forecasts Argentina's 2006-07 corn production at 17.5 million tonnes.