March 23, 2006

 

CBOT Corn Outlook on Thursday: Down 1/2-1 cent, lacks supportive influence

 

 

Corn futures at the Chicago Board of Trade are expected to start Thursday's open auction session lower, in step with overnight losses amid a lack off supportive fundamental influences in the market, traders said.

 

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

 

In overnight electronic trading, May corn was 1/2 cent lower at $2.22, and July corn was 1/2 cent lower at $2.33 per bushel.

 

Corn is poised for a soft open, in tune with e-CBOT declines, gradually working its way down, with weekly export sales under 1,000,000 metric tonnes for the first time in a while adding to the defensive tonnee, said Jack Scoville, analyst with the Price Group in Chicago.

 

The market's overall trend remains lower, but downside activity continues to be subdued, as traders remain reluctant to aggressively press prices amid the potential for speculative fund buying to emerge on prices breaks. However, analysts say without the funds coming in to support higher price levels, a grinding lower trend will be the theme of the market. Abundant supplies in the pipeline, favorable pre-planting weather and worries over the spread of bird flu continue to overhang prices.

 

Technical analysts said it will take a close back above resistance at $2.30 to generate fresh upside technical momentum, while a close below technical support at this week's low of $2.17 would provide better downside technical momentum.

 

First resistance for May corn is seen at $2.25 1/4--Wednesday's high--and then at $2.28. First support is seen at $2.21--Wednesday's low--and then at $2.20.

 

The U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 911,300 metric tonnes, 12% under the previous week and 19% below the prior four-week average. Major buyers include Japan, in for 200,600 tonnes, and South Korea, buying 169,100 tonnes. 2006/07 marketing year sales of 37,000 were to Japan. Trader expectations ranged from 1,000,000 to 1,200,000 tonnes. Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said mainly dry conditions are expected for the eastern Midwest over the next 3 days, with mainly dry conditions through all areas during Friday and Saturday. Temperatures will average well below normal. In the western Midwest, mainly dry conditions are on tap in a 1-3 day period, with temperatures averaging well below normal.

 

In news, South Africa's National Crop Estimates Committee Thursday cut its estimate of the country's 2005-06 corn production to 6.06 million metric tonnes from 6.21 million tonnes in February.

 

Meanwhile, Ukraine exported 1.75 million metric tonnes of corn between the beginning of the current marketing year Oct. 1, 2005 to March 15, compared with 900,000 tonnes in the same period lat year, according to figures released Thursday by the grain market analyst APK-Inform. February corn exports fell by 16%, compared with January, to 323,000 tonnes, APK-Inform added.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled slightly lower on losses in CBOT corn futures Wednesday, analysts said. The most widely held September 2006 contract settled RMB3 lower to RMB1,402/tonne.