September 20, 2006

CBOT Corn Outlook on Wednesday: 1-2 cents higher, following overnight theme

CBOT corn futures are expected to start Wednesday's day session 1-2 cents higher, following the tonnee in overnight trading and possible harvest delays, sources said. In overnight e-CBOT trading, December corn rose 1 1/2 cents to US$2.48 and March gained 1 1/4 cents to US$2.60 1/4. e-CBOT volume overnight in December was 5,170 contracts.

Corn should start off higher based on the overnight trade, a commission house analyst said. There is some concern over the potential for harvest delays with the wet weather forecast for the U.S. Midwest which could add to the tonnee, he noted.

However crude oil is weaker once again and lower energies could mean the funds are dumping their positions, if that is so, then they could possibly liquidate their positions in the grains, the analyst said.

After mainly dry conditions on Wednesday rain and thunderstorms, with amounts of .50-2.00 inches and locally heavier are forecast in the western U.S. Midwest Thursday into Friday, DTN Meteorologix Weather said. The eastern section of the U.S. Midwest is expected to receive .25-1.00 inch Thursday night and Friday. Temperatures will average below or well below normal Wednesday and near to below normal Thursday and Friday, DTN Meteorologix Weather said.

It's a tough time for corn to rally, a commercial analyst said. It's harvest time and there is a lot of corn around. Technically, the US$2.50 level in December corn is a tough level to crack, though the cash markets remain firm as producers are not selling much corn right now as they concentrate on harvesting the crop, he said.

On technical charts, December corn traded to a new two-week high Tuesday before turning lower and closing near the session low, a technical analyst said. He sees first resistance for December corn at US$2.49 1/2, Tuesday's high and then at US$2.50. First support is pegged at US$2.44, this week's low and then at US$2.41.

Cash corn basis bids were mixed Wednesday morning, with Central Illinois 4 cents lower at 2 cents under the December future.

In other corn news, corn futures on China's Dalian Commodity Exchange settled lower with the May contract down RMB/9 at RMB1,405/tonne.

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report at 7:30 a.m. CDT.