April 22, 2009

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents as planting concerns linger

 

 

Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher Wednesday on follow-through strength from overnight gains and lingering concern about planting delays.

 

In overnight trade, May corn ended up 2 1/2 cents to US$3.76 1/2 per bushel and July corn ended up 2 1/4 cents to US$3.85 1/4.

 

Market bulls will try to build on gains from Tuesday, which were fueled by strength in soybeans and slow planting progress. Some traders and analysts discounted any fundamental influence, however.

 

"Frankly the rally felt more like 'turnaround Tuesday' than anything else," said Mark Gold, managing partner of Top Third Ag Marketing.

 

Although summer-like weather will descend upon much of the Midwest for the rest of the week, the trade remains concerned about planting progress because of rain expected late this weekend and into early next week, and uncertainty about weather beyond that.

 

DTN Meteorlogix meteorologist Joel Burgio said in a report that there is "much uncertainty" in the 10-day outlook, with one model showing wet and cool weather in the U.S. Midwest and another showing warmer, drier weather.

 

A floor trader said that traders arrived Monday believing that this week would include a long stretch of ideal planting weather, but that hasn't materialized.

 

"There's not going to be any great window for it," he said. "It's seems like they're going to struggle at least into early May."

 

The trader added that strength in the soybean market continues to offer underpinning support.

 

The bulls' next upside price objective is to push and close prices above solid technical and psychological resistance at US$4.00 a bushel. The next downside price objective for the bears is to push and close prices below solid technical support at the March low of US$3.54 a bushel.

 

First resistance for July corn is seen at Tuesday's high of US$3.87 3/4 and then at US$3.90. First support is seen at US$3.80 and then at Tuesday's low of US$3.77 3/4.

 

Farm Futures noted in a morning commentary that there is "moving average resistance above the market." May corn is below its 50-day moving average at US$3.80, its 100-day average at US$3.84 1/4 and its 20-day average above US$3.90 1/2.

 

Although export demand has remained healthy, poor feed demand and concerns about government policies toward ethanol are pressuring the market, analysts say.

 

In international markets, China's corn prices in major producing areas were higher in the week to Wednesday, as processing plants competed for the crop. Expectations of higher corn prices have led to hoarding of corn stocks by traders and users, said analysts.