March 31, 2010

 

CBOT Corn Outlook on Wednesday: Down 3-5 cents on bearish USDA stocks report

 

 

Chicago Board of Trade corn futures are expected to open 3 to 5 cents lower Wednesday following a bearish quarterly grains stocks estimate from the U.S. Department of Agriculture.

 

The government released the stocks estimate, along with 2010 planting intentions, Wednesday morning. Grain stocks as of March 1 were pegged at 7.694 billion bushels, up from the average analyst guess of 7.505 billion bushels and higher than the 6.954 billion bushels in stocks a year earlier.

 

Traders have said the stocks figure could take on more significance, as a potential sign of poor crop quality last year. If corn has lower test weight, livestock have to eat more of it to maintain weight, depleting supplies faster.

 

Instead, stocks were at the high end of the range of analyst estimates prior to the report.

 

The USDA projected corn acreage at 88.798 million, below the average analyst guess of 88.941 million acres but up from last year's total of 86.5 million acres.

 

Traders widely expected an increase in corn acreage due to the loss in wheat acres, based on the idea that farmers won't leave that land fallow.

 

The acreage estimates for corn and the other key crops showed "no surprise," said Joe Victor, vice president/marketing for Allendale.

 

A floor trader added: "They're within the range."

 

Traders and analysts said the stocks estimate is the main story for corn.

 

"Negative stocks numbers give you a buffer for the acres," said Don Roose, president of U.S. Commodities in Des Moines. "I would look for acres to grow on top of this."

 

Traders and analysts noted that the acreage will fluctuate in the weeks to come based on the weather. As of now, forecasts look favorable for more corn planting, they said.

 

The market remains in a bearish downtrend. In overnight trade, May corn was down 1 1/2 cents to US$3.53 per bushel and July corn was down 1 3/4 cents to US$3.64 1/4.

 

"Corn looks horribly technically, there are no ifs, ands or buts about it," a trader 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. The 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 Tuesday's high of US$3.59 and then at US$3.60, the technical analyst said. First support is seen at Tuesday's low of US$3.51 3/4 and then at US$3.50.

 

The U.S. Department of Agriculture on Wednesday announced private export sales of 281,000 metric tonnes of corn for delivery to South Korea in the 2009-10 marketing year.