January 9, 2006

 

CBOT Corn Outlook on Monday: Lower on weak soy, rain in South America

 

 

Corn futures at the Chicago Board of Trade are predicted to begin trading 1 to 2 cents lower as rain over the weekend in South America, spillover weakness from soybeans and lower prices overnight are expected to undermine futures, sources said.

 

In overnight e-CBOT trading, March corn fell 2 1/2 cents to US$2.11 3/4 per bushel, May corn also declined 2 1/2 cents to US$2.21, and July corn lost 2 1/2 cents to US$2.29 1/4 per bushel.

 

It rained over the weekend in South America and the forecast is calling for additional rain later this week in Argentina where it has been hot and dry, a floor analyst said.

 

The dollar is stronger this morning and outside markets are weaker as well, he added.

 

This week's U.S. Department of Agriculture's production, stocks and supply/demand reports and last week's late price weakness, could also limit the upside, a floor trader said.

 

Although hot and dry weather is expected to continue over the first part of the week in Argentina's corn growing regions, the second half of the week is forecast to have the potential for significant rainfall develop as a high pressure ridge currently bringing the hot and dry conditions will move off to the east, DTN Meteorlogix weather said.

 

Cash corn basis bids were unchanged to mostly higher Monday morning. Central Illinois was unchanged at 3 cents over the March, with St. Louis up 6 cents at 4 cents over the March.

 

In technical trading, a close back below US$2.12 would provide the bears with fresh downside technical momentum, a market technician said. He pegs first resistance for March corn at US$2.16 1/2, Friday's high and then at US$2.18. First support is set at US$2.13 1/2, Friday's low and then at US$2.12.

 

Large non-commercial traders were net long 26,278 futures and options on futures contracts as of Tuesday, Jan. 3, the Commodity Futures Trading Commission reported Friday afternoon.

 

In other corn news, Taiwan's Member Feed Industry Group, (MFIG) bought 60,000 metric tonnes of U.S.-origin corn from Bunge, a Taipei trader said Monday.

 

Prices of corn delivered to Asia may decline in the week ahead on expectations that U.S. futures are likely to fall further, Asian sources said.

 

Asian demand continues to be sluggish and most Asian traders are well covered in corn for the first quarter of this year, they added.

 

Corn futures traded on China's Dalian Futures Exchange settled slightly higher Monday, with the most active September contract up RMB1, ending at RMB1,389/tonne.

 

The USDA is scheduled to release the weekly export inspections report at 10:00 a.m. CST (1600 GMT).