December 7, 2005

 

CBOT Corn Outlook on Wednesday: 1/2-1 cent lower following overnight trade

 

Corn futures at the Chicago Board of Trade are expected to open 1/2 to 1 cent lower On Wednesday, following the tone set in overnight activity and after Tuesday's declines, sources said.

 

In overnight e-CBOT trading, December corn fell 3/4 cent to US$1.90 per bushel, March declined 3/4 cent to US$2.03 1/2, and May ended down 1/2 cent at US$2.12 1/2 per bushel.

 

The funds will set the tone in Thursday's trade, a floor trader said. They bought it Monday and sold it Tuesday, so we will see what they want to do today, he added.

 

The market is setting up for a two-sided trading session, but it looks like it will start out on the down side first, another floor analyst noted.

 

Statistics Canada reported higher corn production this morning. Canadian corn production was estimated at 372.4 million bushels in November, above the 330.4 million estimated in September and the 346.5 million produced in 2004.

 

Generally favorable conditions for plant development are predicted over the next several days in Argentina's corn producing areas, according to DTN Meteorlogix weather.

 

Continued colder than normal temperatures, leading to increased animal feed usage may provide some support, one analyst said.

 

Cash corn basis bids were unchanged to higher Wednesday morning. Central Illinois was even with the March futures, unchanged from Tuesday, while St. Louis was 7 cents over the March futures, also unchanged.

 

The CBOT reported 959 deliveries against the December corn contract. Large issuers included the customer account of ABN Amro, which issued 142 contracts, the customer account of Iowa Grain, which issued 103 contracts, and the customer account of Cunningham Commodities, which issued 104 contracts. Large stoppers included the customer account of Century Group Division of Man Financial, which stopped 156 contracts, the customer account of ABN Amro which stopped 152 contracts, and the customer account of the LBS division of Man Financial, which stopped 90 contracts.

 

On technical charts, market analysts see first resistance for March corn at US$2.06 3/4, Tuesday's high and then at US$2.08 1/4. First support is pegged at US$2.03 1/4, Tuesday's low and then at US$2.00 1/4, the contract low.

 

In other corn news, Chinese domestic cash corn prices rose slightly in the week ended Wednesday on talk that China has issued 4 million tonnes of corn export quotas for early next year. However, one Dalian-based corn trader noted that corn prices could remain under pressure in China over the next several months if bird flu can't be effectively contained.

 

Canada's investigation into allegations of dumping subsidized unprocessed U.S. grain corn into the country has not been delayed, with a ruling by the Canada Border Services Agency still expected by Dec. 15, according to industry officials. The investigation by the Canadian International Trade Tribunal or CITT, follows a compliant by the Ontario Corn Processors Association and several other Canadian corn associations that the dumping and subsidizing of goods in question is harming Canadian production.

 

Corn futures on China's Dalian Commodity Exchange ended mostly flat as recent buying from speculators was absent the market, with the most active September contract edging up RMB1/tonne to RMB1,312/tonne.