April 22, 2008

 

CBOT Corn Outlook on Tuesday: 3-5 cents higher as rains stall planting

 

 

U.S. corn futures are expected to open 3-5 cents a bushel higher on news that spring fieldwork continues to fall behind schedule as rains keep fields too soggy for planting, analysts said Tuesday.

 

After a sharply lower close Monday, futures bounced during the overnight session after the U.S. Agriculture Department reported planting was just 4% complete as of Sunday, up from 2% the previous week but down from nearly 17% planted on average.

 

Nearby May corn added 4 1/4 cents to US$5.84 1/2 in electronic trading, July was up 3 3/4 cents at US$5.97 1/2 and December was also up 3 3/4 cents at US$6.09 a bushel.

 

"While experienced hands know the crop will be planted sooner or later, the slow start will make it difficult for producers to take advantage of higher prices to shift acreage back to corn," Bryce Knorr, senior editor with Farm Futures, said in his morning commentary.

 

"And later planting also could make it more difficult to achieve the type of bumper yields needed to start rebuilding U.S. corn supplies," he said.

 

Fields began to dry over the weekend and some farmers were able to return to the fields, but a new round of showers currently over eastern Iowa, eastern Missouri and parts of Wisconsin are expected to keep producers out of the fields.

 

Thundershowers with up to 0.25 inch of rain will move across Iowa, Missouri, Illinois and Wisconsin on Tuesday, further delaying spring fieldwork, said DTN Meteorologist Bryce Anderson. Another system is forecast to affect most of the Midwest in the latter half of the week, bringing 1.5 inches of rain to the western Midwest and up to 1 inch in eastern locations, Anderson said.

 

No corn has yet been planted in Iowa or Indiana, versus their five-year averages of 12% and 13% seeded, respectively. In Illinois, just 1% of the crop had been planted, compared to 9% at the same time last year and the 29% average.

 

In export news, Turkey said it will buy 150,000 metric tonnes of optional-origin corn for May shipment. The bidding deadline for the shipment is April 29.

 

China's corn futures closed higher Tuesday, helped by stronger cash prices and amid the fundamental change of reduced planted acreage as farmers shift more crops to soybeans because of the potential for higher profits.

 

In other key markets, June crude oil is 63 cents lower at US$116.00 per barrel on the New York Mercantile Exchange. Precious metals futures are mostly higher, with June gold up US$2.20 at US$919.80 an ounce.

 

Technically, bulls' next objective is to push prices above US$6.04, while bears will try to push the contract below solid support at US$5.75 a bushel, an analyst said. First resistance is met at US$6.04, then US$6.10 3/4 - Monday's high. Support is found at Monday's US$5.83 low and then at US$5.80 a bushel.