August 30, 2006

 

CBOT Corn Outlook on Wednesday: Steady-firm, quiet trade expected

 

 

Corn futures at the Chicago Board of Trade are expected to trade steady to firmer Wednesday, supported by overnight gains, with volume expected to be light due to little fresh news.

 

Most active December is called to open steady to 1/2 cent a bushel higher.

 

In e-cbot trade, December corn was 1/4 cent to US$2.39 a bushel.

 

The corn market has reached a lull for the time being, an analyst said. Harvest is starting in southern regions and within a few weeks harvest will be widespread. Once the market gets wind of test weights and yields it will likely choose a direction, but until then corn is moving to the sidelines.

 

Analysts noted if wheat can sustain strength, corn might grab its coattails as it did last week, but otherwise there is little fundamental reason to sustain a rally with harvest close by.

 

A technical analyst said given the choppy trade in corn, the bears still have the solid near-term technical advantage and will likely target a close below the contract low of US$2.33 1/2. Bulls need a move above last week's high of US$2.44 3/4 to change momentum. First resistance for December corn is seen at US$2.40 and then at US$2.41 3/4 and then at US$2.44 3/4. First support is seen at US$2.38 and then at US$2.36.

 

With the crop maturing, weather for developing crops becomes less important and conditions for harvest take on urgency. DTN Meteorologix said while Midwestern weather conditions are favorable for filling crops, the recent cool, wet weather is not helpful for maturing crops.

 

For Wednesday to Friday, dry conditions, or with only a few light showers are expected in northeast areas during Wednesday, with conditions mainly dry during Thursday. There is a chance for showers developing in the far west and in far eastern areas during Friday, although these should be mostly light to locally moderate. Temperatures are seen averaging mostly near normal. Into the weekend, showers are forecast for the west and central regions and temperatures are likely to be near to mostly below normal across the region.

 

Export business was considered routine. South Korea bought 190,000 metric tonnes of feed corn in a Tuesday tender. The first shipment is for 55,000 tonnes of optional-origin corn and will arrive in South Korea on Nov. 25. The rest will be in two shipments of optional-origin corn. One of the shipments will arrive on Dec. 20 and the other on Dec. 25, in South Korea.

 

However, a floor-based analyst said there are hopes for some solid export sales data Thursday in the U.S. Department of Agriculture weekly export sales report and that could limit losses.

 

China's corn prices were mostly unchanged in the week to Wednesday, with demand up in southern provinces, analysts said. An ongoing drought in some provinces and stock-building purchases by local corn processors also lent support.

 

The USDA promised nearly US$800 million in aid Tuesday to ranchers and farmers hit by a near-record drought, on top of US$4 billion in crop insurance the government expects to pay out this year.