August 29, 2006

 

CBOT Corn Outlook on Tuesday: Steady-firm e-CBOT gains lend support

 

 

Corn futures at the Chicago Board of Trade are expected to trade steady to firmer Tuesday, supported by overnight gains and a slight decrease in corn condition ratings

 

Most-active December is called to open steady to 1 cent a bushel higher.

 

In e-cbot trade, December corn was 1/2 cent higher at US$2.41 1/2 a bushel.

 

The U.S. Department of Agriculture said late Monday 57% of the U.S. corn crop is rated in good-to-excellent condition, down one percentage point from a week ago and slightly lower than the unchanged conditions expected by analysts. The crop is 12% mature, above the 10% reported last year and the five-year average of 11%. Corn in dough stage is 93% complete.

 

Seeing a drop in conditions isn't all that surprising, given the stage of development the crop is now in, analysts said, the speed of maturity could be problematic.

 

Don Roose, president, U.S. Commodities, said it's possible the crop is trading in a faster maturity rate for smaller yield and that thinking could underpin corn.

 

DTN Meteorologix said Midwestern rainfall is maintaining adequate soil moisture for filling crops. This wet weather may be unfavorable for any maturing crops or early harvests, especially in the south and east.

 

A technical analyst said bears still have the solid near-term technical advantage and their next near-term downside price objective is a close below the contract low of US$2.33 1/2. The next upside price objective for the bulls is pushing prices above solid resistance at last week's high of US$2.44 3/4. First resistance for December corn is seen at US$2.43 3/4 and then at US$2.44 3/4. First support is seen at US$2.40 and then at US$2.38.

 

Aside from the USDA condition ratings, there is little other fresh news of note to give market participants guidance. That could lead to choppy two-sided trade, analysts said.

 

South Korea seeks 207,500 metric tonnes of feed corn and 110,000 tonnes in a Tuesday tender. About 42,500 tonnes will be of China origin and the rest optional origin.

 

China's northeastern Jilin province plans to auction 500,000 tonnes of old corn Sept. 14-15, nearly matching in scope an equally large auction that it held half a year ago, a local trader said Tuesday. The corn is at least two years old. In February, Jilin Grains Center held an auction for 1.24 million tonnes of old corn.