April 1, 2008

 

CBOT Corn Outlook on Tuesday: Down 2-4 cents on spillover, bean weakness

  

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents a bushel lower Tuesday on follow-through weakness from lower prices overnight and spillover from another round of limit-losses in soybeans, traders and analysts said.

 

Nearby May corn lost 1 1/2 cents to US$5.65 3/4 during the overnight session, while July beans were down 3 1/4 cents to US$5.78 3/4 a bushel.

 

While the fundamentals are still bullish for corn after the U.S. Department of Agriculture said Monday that farmers would plant 8% fewer acres of the grain in 2008-09, prices are being dragged modestly lower by the sharp losses in beans and weakness in wheat, a trader said.

 

A firm U.S. dollar and early weakness in key inflationary markets such as crude oil and precious metals are expected to encourage selling interest in the in the grain pits.

 

May soybean futures overnight fell 70 1/4 cents to US$11.27 a bushel, after limit-down losses were incurred Monday on a bearish USDA crop report. The government said farmers would plant 18% more acres to soybeans this year, as farmers take advantage of strong bean prices and attempt to avoid some of the high input costs involved with corn production.

 

Turnaround Tuesday action is also cited the expected opening weakness in corn, after the market rose Monday on the bullishly construed planting and quarterly stocks reports, the trader said.

 

Many traders expect corn prices to rise in the future in an attempt to buy back some acres lost to soybeans.

 

"This appears to be a buying opportunity for corn given the lower-than-expected intended acreage, lower than expected March 1 stocks implying much stronger December-February consumption than had been anticipated, and Midwest weather that remains wet and cold particularly in the southern sections where corn seedings should have already commenced," said Joel Karlin, analyst at Western Milling Quality Feeds.

 

Weather conditions will be key, however, if farmers are to plant more than the 86 million acres the USDA estimated Monday in its planting intentions report.

 

Wet weather over the eastern and southern Midwest is expected to continue this week, increasing concerns about spring fieldwork delays. In addition, the Delta region will likely remain wet, with additional flooding likely along the rivers and through low-lying fields, private forecaster DTN Meteorlogix said.

 

The western Midwest is expected to be mostly dry Tuesday and Wednesday, with showers confined to Missouri on Thursday. Mainly dry weather is forecast for Friday and Saturday, though temperatures are seen near to below normal.

 

On Monday, snowfall of 4 to 8 inches occurred over the upper Midwest, from the eastern Dakotas to the Great Lakes. The western corn belt saw rains of up to one inch while rainfall of 1 to 1 1/2 inches was featured over the eastern belt.

 

The Midwest six- to 10-day outlook still calls for near- to below-normal temperatures and near- to above-normal precipitation, Meteorlogix said.