September 19, 2006

 

CBOT Corn Outlook on Tuesday: Steady; wheat, technicals could support

 

 

CBOT corn futures are forecast to begin Tuesday's day session at steady levels, floor sources said. However, spillover support from an expected higher start in wheat and technical follow through after Monday's session could influence price direction, they added.

 

In overnight e-CBOT trading, December corn declined 1/2 cent to US$2.47 1/4 and March slipped 3/4 cent to US$2.60 3/4. e-CBOT volume overnight in December was 4,510 contracts.

 

The market could draw some support from a higher opening expected in wheat, a floor analyst said. Wheat is called to open higher on reduced Australian crop production estimates.

 

In addition, corn could see some follow-through buying from Monday's technical rally to two-week highs on open auction only price charts, the analyst added.

 

Monday afternoon's crop progress report was unusual for this time of year, a floor trader said, and could exert a negative influence on prices.

 

The U.S. Department of Agriculture reported that 61% of the U.S. corn crop was in good-to-excellent condition, up two percentage points from last week and nine percentage points higher than last year at this time. Crop conditions usually decline as the crop matures and this could mean big crops get bigger, the trader added.

 

USDA reported 96% of the crop was reported dented compared to the five-year average of 90%. The percentage of the crop mature stands at 52% versus the five-year average of 49%. Nine percent of the crop was harvested compared to 10% last year and the five-year average of 10%.

 

DTN Meteorologix Weather expects mainly dry conditions Tuesday and Wednesday, before rain and thunderstorms with amounts of 0.50-1.50 inches develop through the west on Thursday. Temperatures are expected to average below or well below normal during this period and frost and light freeze conditions are possible in eastern South Dakota, southern Minnesota, northern Iowa and southern Wisconsin, DTN Meteorologix Weather said.

 

On technical charts, December corn gapped higher Monday with bulls gaining fresh technical momentum to suggest a near-term low is in place, a technical analyst said. The next upside price objective is closing prices above solid resistance at US$2.50, with the near-term downside objective closing prices below solid support at US$2.41, he added. First resistance for December corn is seen at US$2.48 3/4, Monday's high and then at US$2.50. First support is seen at US$2.46 and then at Monday's low of US$2.44.

 

In other corn news, the Ukraine Agriculture Ministry said adverse weather conditions this year would result in corn production falling to 6 million to 6.5 million metric tonnes from the 7.167 million in 2005.

 

Corn futures on China's Dalian Commodity Exchange settled lower with the May contract down RMB/3 at RMB1,414/tonne.