May 5, 2009

 

CBOT Corn Outlook on Tuesday: Up 1-3 cents on sluggish crop progress

 

 

Chicago Board of Trade corn futures are expected to open 1 to 3 cents higher Tuesday following Monday's government report highlighting continued slow planting.

 

May corn was up 3 1/2 cents to US$4.01 1/2, July corn was up 1 1/2 cents to US$4.07 and December corn was up 2 1/2 cents to US$4.28.

 

The U.S. Department of Agriculture's crop progress report showed 33% of the crop was planted up from 22% the previous week, slightly below trade estimates that were mostly between 35% and 40% and below the average of 50%.

 

As expected, the report showed greater progress in the western U.S. corn belt, in Iowa and Minnesota, than in the east. The most glaring delays are in Illinois, where the government said only 5% of the crop was planted, compared to the five-year average of 66%.

 

Indiana was also far behind, with progress of 5% compared to the average of 47%.

 

"Certainly Illinois and Indiana farmers can get the crop planted in the next few weeks, but these numbers are very low," Mark Gold, managing partner of Top Third Ag Marketing, said in a market commentary.

 

For Illinois, the second-largest corn producing state, it is the slowest progress since 1993, when there was widespread flooding. Still, Joel Karlin, analyst for Western Milling, said that "respectable yields can still be achieved with late plantings assuming that weather for the rest of the growing season is favorable."

 

He said that in 1993, Illinois' yield was only slightly below the trend. Any rally on the slow progress will be mitigated by weather forecasts calling for improved planting weather this week and favorable long-range forecasts, he said.

 

A floor trader said that the "dynamic" oilseeds market will continue to provide support for corn. He added that there appears to be "renewed appetite for commodities across the sector" that is driving gains in a variety of markets.

 

The next upside price objective is to push and close prices above solid technical resistance at Monday's high of US$4.18 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.85 a bushel.

 

First resistance for July corn is seen at US$4.08 and then at US$4.14, the technical analyst said. First support is seen at US$4.00 and then at US$3.96.