March 24, 2009

 

CBOT Corn Outlook on Tuesday: Mixed to slightly higher on soy, weather

 

 

Chicago Board of Trade corn futures are expected to open mixed to slightly higher Tuesday following overnight gains and support from soybeans, analysts said.

 

In overnight trade, May corn was up 1/2 cent to US$3.96 per bushel, July corn was up 1/2 cent to US$4.06 1/2 and December corn was up 1 cent to US$4.28 1/4.

 

Grains were supported overnight by sharply higher U.S. equities, which surged further after the grains markets closed Monday. But U.S. stock futures were pointing to a lower open Tuesday, and crude oil is lower, which could limit corn's upside, a trader said.

 

The market continues to face rough sledding above US$4, with farmer selling preventing prices from climbing higher, despite a recent break in the dollar, traders said.

 

"Corn trade looks tentative with prices holding, but unable to build upon the break higher caused by the Fed announcement last week," Country Hedging said in a market commentary.

 

The market has little strong fundamental news, although the trade is increasingly focused on the start of planting season. Some traders say wet weather forecasts could mean planting delays, which would be supportive to prices.

 

Assuming estimates of between 81 million and 83 million planted acres of corn turn out to be correct, "it will be extremely important for the planters to begin rolling in the main corn of the belt by early to mid-April at the latest, so as to be finished in the Northern plains by mid to late to May" in order to increase the chance for optimum yields, Benson Quinn Commodities analyst Jon Michalscheck said in a market commentary.

 

Corn has lately gotten support from soybeans, which have climbed in part due to a farmers' strike in Argentina, a trader said. The fact that corn fell slightly Monday despite bullish outside markets was a bearish signal, analysts said. Although the market has appeared to shift to a "buy the breaks" mentality, some analysts note that demand continues to struggle and say buying might be dried up at the moment. "The markets are technically overbought and nearing some key resistance areas," Western Milling analyst Joel Karlin said in a weekly newsletter. "Consider that demand remains sluggish and it is doubtful that higher prices will improve that situation."

 

The next downside price objective is to push and close May prices below solid technical support at US$3.75 a bushel, a technical analyst said. The 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 US$4.00 and then at Monday's high of US$4.03 3/4, the technical analyst said. First support is seen at Monday's low of US$3.92 1/2 and then at US$3.90.