October 3, 2006

 

CBOT Corn Outlook on Tuesday: 1-2 cents lower on wheat, outside markets

 

 

Corn futures are expected to open 1-2 cents lower Tuesday on spillover weakness from wheat futures and lower outside markets, sources said.

 

In overnight e-CBOT trading, December corn declined 2 1/4 cents to US$2.65 1/2 per bushel and March slipped 1 3/4 cents to US$2.79. e-CBOT volume in December was 3,799 contracts.

 

Corn has been supported by stronger wheat values and wheat has been higher recently on dryness concerns in Australia and Argentina, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

Wheat is weaker Tuesday morning on rainfall in Argentina and weaker calls in wheat should impact corn, he noted.

 

Lower metals and energy prices will add to the poor tone for commodities in general with metals and energy futures under pressure, a floor source said.

 

Technically, corn is overbought and due for a correction, and there is still 80% of the U.S. crop left to be harvested, Roose said.

 

In addition, corn's crop ratings remain high and that indicates the government's September crop production figures were more accurate than not, he added.

 

The U.S. Department of Agriculture reported Monday that 61% of the U.S. corn crop was in good-to-excellent condition, compared to 55% a year ago.

 

Twenty percent of the crop was harvested, below the 25% combined in 2005 and the five-year average of 23%.

 

Eighty-eight percent of the crop was rated mature, above the 5-year average of 82%.

 

In the western U.S. Midwest mainly dry weather is forecast through early Saturday, with temperatures near to above normal early in the period and near to below normal later in the period, DTN Meteorologix Weather said.

 

In the eastern US Midwest, mostly dry weather is expected Thursday through Saturday with temperatures near to above normal early in the period, Meteorologix Weather said.

 

On technical charts, the next upside price objective for bulls is closing prices above solid resistance at US$2.70, while the bears' next near-term downside price objective is closing prices below support at US$2.60, a market technician said.

 

First resistance for December corn is seen at US$2.69 1/2, and then at US$2.70. First support is pegged at Monday's low of US$2.65 1/4 and then at US$2.62 1/2.

 

Corn basis bids were unchanged to lower Tuesday. Central Illinois was unchanged at 3 cents under the December future.

 

In other corn news, premiums for corn delivered to Asia may decline slightly in the week ahead due to lackluster near-term demand, sources said.

 

China's corn futures markets remain closed due to a holiday.