April 21, 2009

 

CBOT Corn Outlook on Tuesday: Up 1-2 cents; slow planting pace supports

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Tuesday following overnight gains as the market gets support from the sluggish start to the U.S. planting season.

 

Corn is called 1 cent to 2 cents higher. In overnight trade, May corn was up 1 3/4 cents to US$3.71 1/4 and July corn was up 1 1/2 cents to US$3.80 1/4 per bushel.

 

The market fell Monday but ended well off its lows for the day, and corn got a modest boost from Monday afternoon's crop progress report from the U.S. Department of Agriculture, which showed 5% of the crop was planted up from 2% last week but below the average of 14%.

 

The trade had been expecting slow progress because of wet, chilly weather so far in much of the U.S. corn belt, but the USDA's figure was nonetheless at the low end of expectations. All of the major corn producing states are behind schedule, including Illinois, which has planted only 1% of the crop, compared to an average of 23%.

 

Mitigating the support from the report are expectations that drier, warmer weather will help farmers get into the fields through the end of the month.

 

`There is still plenty plenty!!!... of time to get the corn crop planted well before there are late season problems; but the fact of the matter is that the nation's farmers are behind and further delays are to be watched with some sense of concern,' Dennis Gartman wrote in Tuesday's Gartman Letter.

 

A floor trader said the trade has recently seemed to be "disregarding the slow planting pace" but that Monday's report serves as a reminder that the crop is behind and that planting dates can affect the crop's yield.

 

He added that wetter forecasts for the 6-day to 10-day period gave the market support Monday and prompted some to buy December corn and sell November beans.

 

The DTN Meteorlogix forecast calls for drier, warmer weather to help to improve conditions for field work and early planting of corn and soybean areas through Friday. But cooler and wetter weather will redevelop after that.

 

Some analysts see Monday's rebound off early lows as the sign of a bottom, while others say the market is in a technically weak posture.

 

"We could see prices erode another 10 cents before some support surfaces," Western Milling analyst Joel Karlin said in a market commentary.

 

Weak demand is weighing. Although export sales have been fair, feed demand is poor and traders are concerned about future ethanol demand.

 

A technical analyst said that near-term chart damage has been inflicted recently. The next upside price objective is to push and close July prices above solid technical and psychological resistance at US$4.00 a bushel, he said, while the next downside price objective is to push and close prices below solid technical support at the March low of US$3.54 a bushel.