March 7, 2006

  

CBOT Corn Outlook on Tuesday: Seen down 1/2-1 cent; in tune with e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start Tuesday's open auction session with an easier feel, in tune with the overnight theme amid follow through selling from Monday's weak technical close.

 

Analysts expect corn to open 1/2 to 1 cent per bushel lower.

 

In overnight electronic trading, March corn was 1 cent lower at US$2.22, and May corn was 3/4 cent lower at US$2.32 per bushel.

 

Carryover selling from Monday's gap lower price movement is seen applying early pressure with beneficial rains providing favorable soil conditions for early planting across the Midwest attracting selling interest, analysts said.

 

However, traders said despite Monday's setback, futures have held up fairly well in the face of bearish supply side fundamentals and with a quiet news front Tuesday, fund related activity will be watched closely for clues to eventual price direction.

 

Market technicians said Monday's gap lower price move produced no serious chart damage, but good follow-through selling on Tuesday would begin to create some chart damage to suggest a near-term top could be in place. A close below technical support at US$2.30 would also provide the bears with some fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.34 and then at US$2.35 3/4--Monday's high. First support is seen at US$2.31 3/4--Monday's low--and then at US$2.30.

 

The absence of clear direction in outside markets with metals and energy futures mixed is not expected to influence prices in early action. Meanwhile, lingering concerns over the spread of bird flu around the world is expected to limit upside potential while potential advances in the neighboring wheat market amid declining winter wheat crop rating may provide spillover support, traders added.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said rain and thunderstorms in the U.S. Midwest will maintain high available soil moisture for wheat while greatly improving the top and sub soil moisture for the upcoming corn and soybean planting season.

 

In demand news, Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 metric tonnes of U.S.-origin corn from trading house Cargill in a tender concluded Tuesday, said a company official. The purchase is for April 13-27 delivery if it is shipped from the U.S. Gulf or April 28-May 13 if the corn is shipped from the Pacific Northwest.

 

In deliveries, a total of 317 delivery notices were posted against the March future. The primary issuers were a customer account at Tenco with 100 lots and a customer account at ADM Investor Services with 200 lots. The principle stopper was a customer account at Fimat with 191 lots. The last date assigned was February 28.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange finished slightly lower on Monday's losses in CBOT corn, analysts said. The benchmark September 2006 contract settled RMB7 lower at RMB1,456/tonne.