December 16, 2003

 

 

CBOT Corn Outlook On Tuesday: Market Seen Firmer On Sales, Follow-Through

 

Chicago Board of Trade corn futures are expected to open steady to 1/2 cent a bushel higher Tuesday on carryover buying spilling over from Monday's strong close and on a surprise announcement that 100,000 metric tons of U.S. corn were sold to Egypt.

 

At 0800 CT (1400 GMT), the U.S. Department of Agriculture confirmed export sales of 100,000 tons of corn for delivery to Egypt in the 2003-04 marketing year.

 

"It's good. It's good," a CBOT grain trader said. "It's not earth shattering, but it's good."

 

The unexpected sale is anticipated to help boost a market that was already considered firm to begin with on carryover strength. Monday, corn futures ended the day mostly higher in technical trade after local traders covered short positions that afternoon after hitting the day's low. Commission houses supported prices throughout the day, but after the fund buying came to a halt, prices dropped and local traders were caught short. The covering of those positions, floor sources said, gave the market its second wind to make for a strong close. That momentum, sources said, is expected to continue into Tuesday's session.

 

Adding background strength to the market, the U.S. dollar continued on its march to historically low levels Tuesday morning after posting a remarkable surge on Monday. Tuesday morning, the dollar slipped to as low as 88.18 cents on the dollar index, which is a measure of the dollar in comparison to a composite of world currencies. The weakness in the dollar, sources said, is friendly to U.S. commodities as it makes them more affordable abroad.

 

In South America, Argentine farmers are more than two-thirds done planting the 2003-04 corn crop, according to reports. The Agriculture Secretariat said that as of Friday, 67% of the new crop was planted. The Buenos Aires Cereals Exchange, though, said 77.2% of the crop was planted as of Saturday. Both reports indicate decent progress toward completion.

 

Weather wise, Argentina's crop belt saw showers and thunderstorms Monday morning with rather cool temperatures. Rainfall amounts were less than 0.80 inch, while coverage was about 65% - 75%, Global Weather Services said. Forecasters call for warmer and drier weather into the weekend, allowing corn planting to progress without interruption. A cold front, though, will arrive early next week and bring scattered showers. Between 0.40 and 1.50 inches are expected with coverage of about 50% to 60%.

 

In deliveries, Fimat issued all 10 corn contracts while Rand Financial accepted delivery on all contracts.