March 31, 2009

 

CBOT Corn Outlook on Tuesday: Up 3-5 cents on soy support; report neutral

 

 

Chicago Board of Trade corn futures are expected to be 3 to 5 cents higher Tuesday on support from soybeans, which are expected to climb on the government's planting intentions and quarterly grain stocks reports.

 

The reports were mostly considered neutral for the corn market.

 

Planted acres for corn were projected at 84.986 million, down from last year's total of 85.982 million acres but slightly above analysts' average estimate of 84.548 million acres. Analyst estimates had ranged from 81.4 million to 89 million acres.

 

Traders had mostly expected acreage to fall because of the drop in corn prices, coupled with high input costs and an uncertain economy. They had expected those acres to shift to soybeans, but the U.S. Department of Agriculture hiked soybean acreage only to 76.024 million acres, far below the average analyst estimate of 79.251 million.

 

With soybean quarterly grain stocks also below expectations, that market is expected to open 20 to 30 cents higher, with support spilling over into corn.

 

"They'll ride on the coattails of beans," Vic Lespinasse, analyst for GrainAnalyst.com, said of corn futures.

 

Modest overnight gains and supportive outside markets could add to the firm tone for corn, traders said.

 

The USDA said quarterly grain stocks as of March 1 were 6.958 billion bushels, compared to 6.859 billion a year earlier. Analysts had expected stocks of 7.003 billion bushels.

 

"Corn and wheat data [were] neutral for both markets," said Risk Management Commodities senior analyst Mike Zuzolo. "The corn stocks number came in below estimates and that could provide enough of a lift for the market to follow soybeans higher."

 

In overnight trading, May corn was up 2 cents to US$3.88 1/4 per bushel and July corn was up 1 1/2 cents to US$3.98 1/4.

 

Many traders say that with the report out of the way, the market will begin to focus more closely on U.S. corn belt weather, which has been wet and chilly, potentially delaying early planting.

 

The next downside price objective is to push and close May prices below solid technical support at US$3.70 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$4.03 3/4.