April 14, 2009

 

CBOT Corn Outlook on Tuesday: Up slightly, supported by soybeans

 

 

Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher Tuesday following modest overnight gains, with soybeans continuing to support the market, analysts said.

 

In overnight trading, May corn was up 1/4 cent to US$3.87 3/4 and July corn was up 1/2 cent to US$3.97 3/4.

 

A floor trader said soybeans, which have been supported by concerns about the crop in Argentina and Chinese demand, remains key to the market. Corn is range-bound, traders said.

 

"Yesterday saw a rather tight trading range in corn as it seems to be caught between its own bearish fundamentals and a perpetually higher soybean market," County Hedging analyst Brian P. Liedl said in a morning commentary.

 

Farmer selling has continued to weigh on corn, particularly around US$4, limiting upside movement, a trader said. A downside break is possible if favorable crop planting conditions emerge, but the strength in soybeans would limit that break, he said.

 

The next upside price objective is to push and close May prices above solid technical resistance at the April high of US$4.07 1/2, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.76 3/4 a bushel.

 

First resistance for May corn is seen at Monday's high of US$3.90 1/2 and then at US$3.95, the technical analyst said. First support is seen at Monday's low of US$3.83 and then at US$3.80.

 

"This market looks rather tired and after a good run for the past six weeks some correction should be seen, with the May contract perhaps testing the US$3.60 region," Joel Karlin, analyst for Western Milling, said in a market commentary.

 

Concerns about a late start to planting are providing underlying support, although weather forecasts indicate a favorable shift for planting, analysts said.

 

Monday's crop progress report from the U.S. Department of Agriculture showed corn planting at 2% complete as of Sunday, same as last year but down from the average of 6%.

 

DTN Meteorlogix says that "a higher amplitude ridge west, trough east pattern will develop over the US during the 6-10 day period."

 

This will bring an end to the "parade" of storms that have moved through the country and caused cool, wet weather in the U.S. corn belt, according to the forecast.

 

"This developing pattern will bring drier weather to the Plains and western Midwest next week while the eastern Midwest could remain unsettled depending upon the location of the upper level trough," the weather service said.

 

A trader said outside markets such as crude oil and the dollar are "back and forth" and not providing clear direction to the grains Tuesday.