March 30, 2010

 

CBOT Corn Outlook on Tuesday: Up slightly amid pre-report positioning

 

 

Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher Tuesday amid short-covering ahead of Wednesday's government report and end-of-month fund-buying.

 

In overnight trade, May corn was up 1 1/2 cents to US$3.58 1/2 per bushel and July corn was up 1 1/4 cents to US$3.69 1/2.

 

Traders say the market is biding its time until Wednesday's planting intentions and quarterly grain stocks reports from the U.S. Department of Agriculture. The reports will be released at 8:30 a.m. EDT Wednesday.

 

On average, analysts surveyed by Dow Jones Newswires expect the USDA to project plantings at 88.941 million acres, up from 86.5 million in 2009.

 

A weaker dollar and slightly higher crude oil could give the market some support on Tuesday, and traders add that fund-buying as the end of the month and the quarter approaches could be a factor.

 

But the market is unlikely to move significantly in either direction ahead of the report, analysts said.

 

Weather forecasts are favorable to farmers and bearish the market, analysts said. Sharply higher temperatures in the U.S. Midwest this week will aid fieldwork, they said, longer-range forecasts are not excessively wet.

 

The improved weather is defusing one of the recent bullish fundamental arguments: that high soil moisture due to the heavy snow will delay planting this season.

 

"If new crop corn goes in the ground timely in adequate to abundant soil moisture (with El Nino present) a new bearish price trend will develop," Ag Resource Co. said in a commentary.

 

Technically the market is in a bearish trend, analysts said. The next downside price objective for the bears is to push and close prices below solid longer-term technical support at US$3.50, a technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at US$3.76 1/2 a bushel.

 

First resistance for May corn is seen at Monday's high of US$3.60 and then at US$3.65, the technical analyst said. First support is seen at last week's low of US$3.54 and then at US$3.50.

 

In export news Tuesday, South Korea's Nonghyup Feed Tuesday bought two Panamax cargoes of U.S. yellow corn of around 55,000 metric tonnes each in a tender, a trading executive said.