September 26, 2006

 

CBOT Corn Outlook on Tuesday: Modestly higher on follow-through

 

 

CBOT corn futures are expected to begin Tuesday's day session trading 1 to 1 1/2 cents higher, as follow-through from higher prices overnight with concerns about the harvest pace of the U.S. corn crop adding some support, sources said.

 

In overnight e-CBOT trading, December corn rose 1 1/4 cents to US$2.56 per bushel and March gained 1 3/4 cents to US$2.70. Overnight e-CBOT volume in December was 2,051 contracts.

 

Corn bounced Monday on the close, and the market could see some follow-through from strength in the overnight session, said Don Roose, president of US Commodities in West Des Moines, Iowa. The outside markets that helped support corn Monday, however, are stagnant this morning, he said.

 

The weather during the next two weeks for the most part is favorable for harvest, which could alleviate some concerns about the harvest pace in Monday's crop progress report, he said.

 

The U.S Department of Agriculture reported that 13% of the U.S. corn crop was harvested of as Sep. 24, at the low end of analysts' expectations and four percentage points below last year's 17%. In Illinois, 14% of the crop has been combined, versus 28% in 2005 and the five-year average of 19%. In Iowa,4% of the crop was harvested, slightly below the 6% last year and the five-year average of 6%.

 

In the western U.S. Midwest, mostly dry conditions on Tuesday will be followed by the chance for light sprinkles on Wednesday before dry weather returns on Thursday, DTN Meteorologix Weather said. Temperatures will average near normal Tuesday and below to much below normal Wednesday.

 

In the eastern U.S. Midwest, mainly dry conditions on Tuesday will give way to light and scattered showers on Wednesday and Thursday, DTN Meteorologix said. Temperatures in the region will be near normal Tuesday and near to below normal Wednesday and Thursday.

 

On technical charts, first resistance for December corn is seen at US$2.55 3/4 - Monday's high - and then at US$2.57 3/4. First support is pegged at US$2.52 1/2, and then at US$2.50.

 

Cash corn basis bids were mixed Tuesday morning, with Central Illinois unchanged at 5 cents under the December future.

 

In other corn news, sources said that Taiwan purchased 60,000 metric tonnes of U.S. corn overnight and South Korea bought 110,000 metric tonnes of optional origin corn.

 

Corn futures on China's Dalian Commodity Exchange settled mostly higher with the May contract up RMB/3 at RMB1,397/tonne.

 

China's 2007 import quotas for grains remain unchanged from 2006, the National Development and Reform Commission said. The import quota for corn will be 7.2 million metric tonnes. The quota has remained unchanged since 2004.