March 10, 2009
CBOT Corn Outlook on Tuesday: Higher on crude, heavy Midwest rains
Chicago Board of Trade corn futures are expected to open higher Tuesday, led primarily by outside markets, traders said.
Corn is called 3 to 5 cents higher. In overnight trade, March corn was up 3 cents to US$3.60 1/4 per bushel, May corn was up 3 1/2 cents to US$3.69 and July corn was up 3 1/2 cents to US$3.78 3/4.
Continued strength in crude oil is giving corn a boost because of both markets' ties to ethanol, traders said. "The dollar is weaker, so that should also help," a trader added.
Some traders and analysts are beginning to raise concerns about the excessive rains in parts of the corn belt, and potential delays to planting. Farm Futures noted in a morning commentary that there is major flooding along some areas of the Illinois River.
But traders also note that it's awfully early to be worried about planting - some say it's too early.
"I'm not going to get bulled up on the weather picture just yet," one trader said.
The trade is looking ahead to Wednesday's supply and demand report, which is expected to show a slight increase in 2008-09 ending stocks. Most traders and analysts expect the report to be a non-event for corn, although a trader said it could prompt cautious trading Tuesday.
Comments from U.S. Agriculture Secretary Tom Vilsack are supporting the market, traders and analysts say. Vilsack on Monday called for an increase in the cap in the ethanol blend rate for gasoline beyond the current 10% level. He said 20% was obtainable in a couple of years.
The next downside price objective is to push and close May prices below solid technical support at last week's low of US$3.44 1/2 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at the last "reaction high" of US$3.80 1/2.
First resistance for May corn is seen at Monday's high of US$3.70 and then at US$3.75, the technical analyst said. First support is seen at US$3.60 and then at US$3.55.
In other news, there were 1,160 deliveries reported Tuesday against the March contract.
