August 23, 2006

 

CBOT Corn Outlook on Wednesday: Steady; watching action in wheat, soy

 

 

Corn futures at the Chicago Board of Trade are expected to trade steady Wednesday, supported by a slightly firmer action expected from soybeans and wheat, but that could be offset after a softer close on Tuesday and weakness in overnight trade.

 

Most active December is called to open unchanged.

 

In e-cbot trade, December corn was 1/4 cent weaker at US$2.35 3/4 a bushel. Volume was light.

 

A technical analyst said after Tuesday's close near the session low, trading has turned choppy and sideways at lower price levels. The bears are still in command and their next near-term downside price objective is a close under US$2.25 for December. Bulls need a close above US$2.42 to change momentum. First resistance for December corn is seen at US$2.37 1/2 and then at US$2.39 1/4. First support is seen at US$2.34 3/4 and then at US$2.33 1/2, the contract low.

 

The U.S. Department of Agriculture said early Wednesday Japan bought 146,304 metric tonnes of corn for the new-crop marketing year. This is on top of a Japanese sale on Tuesday. "Corn is consolidating, base-building, at these lows. That means we're building a good demand base. The bad news is we're coming on harvest, so it's going to be hard to rally," said John Kleist, of Kleist Agriculture Consulting.

 

With little other fresh fundamental news, the market will watch for data out of a crop tour winding its way through the Midwest.

 

Crop scouts on day two of the John Deere/Pro Farmer U.S. Midwest Crop tour found Nebraska corn yields in line with the Aug. 1 estimate from the USDA in its August crop production report. The scouts estimate corn production at 123.23 bushels, almost unchanged from the tour's 123.02 bushel estimate in 2005. The USDA projected corn production in Nebraska at 153.0 bushels per acre in its August survey, one bushel less than in 2005. Tour scouts are looking ahead to sampling the corn and soybean crops in western Iowa Wednesday, as the tour moves north and east from Nebraska City, Neb. to Worthington, Minn.

 

Indiana's corn yields were deemed disappointing by crop scouts on the tour's eastern leg. Yield checks in Indiana cornfields conducted by the tour estimated yield at 136.69 bushels per acre. That was virtually identical to 2005 tour estimates of 136.48 bushels, despite USDA forecasts of an 8.4% yield increase in the state this season.

 

The eastern leg of the crop tour will proceed westward Wednesday, reconvening in Iowa City, Iowa, with production estimates for the Illinois harvest.

 

DTN Meteorologix said the two main weather models, the US and European, agree on the weather outlook for the next five days, but are only in fair agreement during days 6-10. Longer-term, both models have higher than normal heights for the upper Midwest and the Manitoba/Ontario region of Canada which they say is an above normal temperatures pattern for much of the USA. Rainfall is a harder call as there may be thunderstorms over top to the ridge and to east of any troughs in the lower Miss and Tennessee river valleys.

 

In the next few days, scattered thunderstorms redevelop through the Midwest during Friday into Saturday and rainfall will favor filling crops. Warm temperatures continue to advance development of these crops.

 

Looking at international news, China's corn prices were mostly unchanged in the week to Wednesday. In Jilin, China's largest corn-producing province, and prices in northeastern Heilongjiang province, another major producing area, were unchanged from last week traders there told Dow Jones Newswires.

 

Ukraine is expected to export 2.16 million metric tonnes of grain to Aug. 23, according to the agrarian exchanges' union. Ukraine's grain export this marketing year is seen at about 10 million tonnes, down from the 13.3 million tonnes exported in the previous marketing year.