March 17, 2009
CBOT Corn Outlook on Tuesday: Down 1-2 cents on overnight losses
Chicago Board of Trade corn futures are expected to open slightly lower Tuesday following overnight losses as the market awaits direction, traders said.
Corn is called 1 to 2 cents lower. In overnight trading, May corn was down 1/2 cent to US$3.91 per bushel and July corn was down 3/4 cent to US$4.01.
Given low volume and lack of price movement overnight, along with mixed outside markets, corn will struggle for direction, a trader said.
"I think it's going to come down to hard red winter wheat weather," the trader said. "It's really a quiet morning." CBOT wheat climbed sharply Monday due in part to dry weather in the U.S. Plains.
Technically, the corn market is on an uptrend and surpassed its 100-day moving average in both the May and the December contracts on Monday for the first time since July. Analysts note that open interest climbed almost 10,000 contracts Tuesday, which indicates "managed money getting to the long side," in the words of one trader.
Concerns about planted acreage have supported the market in recent days, analysts said. On Tuesday Farm Futures released a survey of 1,370 farmers that pegs corn acreage at 82.46 million acres, down from 86 million in 2008.
"Growers appear to be waiting on the sidelines for rallies, ready to switch to soybeans if the market does not give them a better shot at a profit," Farm Futures senior editor Bryce Knorr said in a market commentary.
The key factor in the expected switch to soybeans, he said, was risk aversion given the uncertain economy.
The survey joins other private estimates calling for fewer planted acres. A projection of 81.4 million planted acres by Informa Economics on Friday that was credited with starting a rally. But a trader said the numbers were largely "discounted" on Monday, as wheat and soybeans climbed sharply, gaining back some of the ground they lost to corn last week.
The next downside price objective for the bears is to push and close prices below solid technical support at US$3.70 a bushel. The bulls' next upside price objective is to push and close prices above solid technical resistance at US$4.25. First resistance for May corn is seen at Monday's high of US$3.97 1/2 and then at US$4. First support is seen at US$3.85 and then at Monday's low of US$3.81 1/2.
