March 23, 2010

CBOT Corn Outlook on Tuesday: Seen mixed, waiting for acreage data

Chicago Board of Trade corn futures are expected to start mixed Tuesday as traders continue to look ahead to key U.S. Department of Agriculture crop reports due out next week.

In overnight electronic trading, nearby CBOT May corn closed unchanged at US$3.70 3/4 a bushel.

Traders are taking a step back from the market as they wait for the government to issue reports March 31 on prospective plantings and quarterly grain stocks. The plantings report will provide the first glimpse at how many acres of corn farmers are planning to plant this spring.

Strength in the U.S. dollar and weakness in crude oil are mildly bearish for CBOT corn, but market participants are focused on the reports, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. A firm dollar is often considered negative because of perceptions it makes U.S. grain less attractive to foreign buyers and reduces investors' appetite for risk.

"The dollar is stronger and the crude oil and gold markets are trading lower, but the corn market seems to have little interest in anything but the report next week," Pfitzenmaier said. Sideways trading is expected for the rest of the week, he said.

Prices have some underlying support from concerns that wet weather will delay the start of U.S. planting and could encourage some producers to seed other crops, such as soybeans, if they can't plant corn in a timely manner. Periodic rain and some snow through southern and eastern areas of the Midwest will keep fields "very wet and delay any early field work or planting," according to private weather firm DTN Meteorlogix.

However, temperatures are expected to warm up over the next few days and "a little sunshine and wind will dry things up pretty quickly," Pfitzenmaier said. He noted that rallies will likely be met with farmer selling, which will keep the market in a trading range.

The next downside price objective for the bears is to push and close May corn below solid technical support at the February low of US$3.59, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the March high of US$3.92, he said.

First resistance for May corn is seen at last week's high of US$3.76 1/2 and then at US$3.80. First support is seen at US$3.70 and then at US$3.65, the analyst said.