Chicago Board of Trade corn futures are set to open weaker Tuesday morning following overnight losses on a strong dollar and weaker crude oil.

 

Corn is called 2 cents to 4 cents lower. In overnight trade, March corn was down 4 cents to US$3.60 1/2 per bushel and May corn was down 3 3/4 cents to US$3.71 1/4.

 

Analysts say the session will be defined in part by positioning ahead of the U.S. Department of Agriculture's supply and demand report and expected revisions to the 2009 U.S. crop. Traders are mostly expecting a modest reduction in 2009 output, but 2009-10 projected ending stocks could hold steady due to weaker demand. The report will be released at 8:30 a.m. EST Wednesday.

 

Analysts on average estimate the USDA will peg the 2009 crop at 13.081 billion bushels, down from the government's January estimate of 13.151 billion. Analysts on average estimate that the USDA will peg 2009-10 carryout at 1.716 billion bushels, virtually unchanged from the government's February estimate of 1.719 billion.

 

A strong dollar and weaker crude oil weighed on the market overnight and could continue to pressure it Tuesday, analysts said.

 

Some of the selling pressure in corn is due to technical weakness, a trader said. The market ended Friday at its weekly low and was unable to bounce Monday.

 

Expected large South American crops are also bearish, and although warmer weather and rains in the forecast in the Midwest could prompt flooding, some traders and analysts say that if the region is going to flood due to snowmelt, it is better for that to happen now rather than in April, closer to planting.

 

Mark Gold, managing partner of Top Third Ag Marketing, told clients that Tuesday's trade could be "the last great opportunity to manage risk for the next several months."

 

He advised owning May put options as a way of protecting against Tuesday's report, as well as the April supply and demand report plus the possibility that warmer weather could force a significant amount of corn onto the market due to fears of spoilage. The puts cost 10 cents, he said.

 

"If the markets rally we will lose the dime, but we will gain value on the crop you have left to sell," Gold said. "Spend the dime and pray you lose it, but if there is a problem you don't want to be a deer in the headlights."

 

The next downside price objective for the bears is to push and close May prices below solid technical support at US$3.65 a bushel, a technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at last week's high of US$3.92 a bushel.

 

First resistance for May corn is seen at Monday's high of US$3.78 1/2 and then at US$3.80, the technical analyst said. First support is seen at Monday's low of US$3.72 3/4 and then at US$3.70.