March 28, 2006

 

CBOT Corn Outlook on Tuesday: Flat-up 1 cent, sideways ahead of USDA reports

 

 

Chicago Board of Trade corn futures are seen starting Tuesday's session steady to firm, in tune with overnight action, with traders anticipating a sideways theme will remain in place as the market gears up for Friday's planting and stocks report.

 

Analysts expect corn to open flat to 1 cent per bushel higher.

 

In overnight electronic trading, May corn was 1/2 cent higher at $2.22 1/4, and July corn was 1 cent higher at $2.33 1/2 per bushel.

 

Range-bound action, with the nearby May contract chopping around the $2.20 per bushel level is expected to continue into Friday's U.S. Department of Agriculture reports, said John Kleist of Kleist Agricultural Consulting. A nice moisture base for spring plantings and a lack of aggressive speculative selling should limit upside movement, while apparent commercial interest beneath the market should keep a near term floor under prices, Kleist adds.

 

Meanwhile, analysts say speculative fund longs are beginning to tiptoe back into the market after three weeks of liquidation, with many traders content to sit on the sidelines ahead of Friday's reports.

 

USDA is scheduled to release its prospective planting and quarterly grain stock reports Friday at 7:30 a.m. CST (1330 GMT). The average estimate of trade projections peg 2006 corn acreage at 80.576 million acres from a range of guesses that span from 80.091 million to 81.000 million. The average of quarterly stock estimates was 6.987 billion bushels from guesses that ranged from 6.942 billion to 7.057 billion.

 

Market technicians say prices are still in a steep four-week-old downtrend on the daily bar chart and a bearish pennant pattern has formed on the daily chart. It will take a close back above resistance at $2.28 to provide some fresh upside technical momentum, while a close below technical support at this month's low of $2.17 would provide better downside technical momentum.

 

First resistance for May corn is seen at $2.23 - Monday's high - and then at $2.24. First support is seen at $2.18 3/4 - Monday's low - and then at $2.18.

 

U.S. Midwest cash corn basis bids were steady to lower Tuesday, cash traders said. Spot U.S. cash corn bids were down 3 cents in Champaign, Ill., down 5 cents in Peoria, and down 6 cents in Kansas City, MO.

 

DTN Meteorlogix Weather Service said mainly dry conditions are on tap for the western Midwest Tuesday, with a chance for showers and breezy conditions developing Wednesday. Showers and thundershowers will emerge Thursday, while temperatures average below normal today, near to above normal Wednesday and Thursday.

 

In the eastern Midwest, showers may linger Tuesday through the eastern portion of the Midwest and in the southern portion of the Delta. Mainly dry conditions are expected Wednesday and early Thursday, with showers and windy conditions later on Thursday. Temperatures will average near to below normal Tuesday, near to above normal Wednesday and Thursday, Meteorlogix added.

 

In demand news, South Korea's Major Feedmill Group, or MFG, and Korea Feed Association, or KFA, have decided not to award their joint tender for 55,000 metric tonnes of U.S. corn to any trading house, as bids were too expensive, a trader in Seoul said Tuesday. KFA and MFG haven't decided if they will call for a new tender, the trader added.

 

In overseas markets, corn futures on China's Dalian Commodity Exchange settled mixed, with the active September 2006 contract ending unchanged at RMB1,407/tonne amid two-sided trade.

 

In other news, Avian influenza, or bird flu, has been detected in a poultry sample from the central Indian province of Madhya Pradesh, the federal government said Tuesday. Meanwhile, a European Union reference laboratory has confirmed a buzzard found dead in Denmark two weeks ago was infected with the deadly H5N1 strain of bird flu, authorities said Tuesday.