May 6, 2009

 

CBOT Corn Outlook on Wednesday: Flat, up slightly; trade eyes weather

 

 

Chicago Board of Trade corn futures are expected to open steady to slightly higher Wednesday amid uncertainty about planting progress, analysts said.

 

In overnight trading, May corn, which is in delivery, was up 3/4 cent to US$3.99 1/4 per bushel, July corn was up 3/4 cent to US$4.06 and December corn was up 1 cent to US$4.26.

 

The trade's main focus is on the weather, because the crop is in a crucial planting period. But forecasts are mixed, as producers enjoying a planting window through much of the corn belt, but concerns linger about how much work is getting done.

 

"This morning's American model run is a bit drier for next week, especially in the east, but weather models are starting to flip-flop, keeping forecasts uncertain," Farm Futures senior editor Bryce Knorr said in a morning commentary.

 

DTN Meteorlogix calls for continued rains in the southern U.S. corn belt and into the Delta through the end of the week, keeping planting "very slow." The southern and eastern corn belt have seen the greatest planting delays so far this season due to wet weather.

 

Delays have been especially pronounced in Illinois and Indiana. Analysts say that the crop faces the prospect of reduced yields as planting extends beyond the middle of May.

 

Benson Quinn Commodities analyst Jon Michalscheck said in a commentary that there was a "general lack of news to stimulate renewed buying interest" on Tuesday, and that he expects a similar pattern Wednesday, ahead of Thursday's weekly export sales report. He added that the weather forecast "may very well determine whether additional risk premium will be needed to be added."

 

The market traded a tight range for most of Tuesday and again overnight, a trader said.

 

Demand is seen as relatively weak, particularly for feed. The swine flu outbreak, although off the front pages of newspapers, remains a problem for the pork industry, which could hurt feed demand long-term, analysts say.

 

July corn, the most active contract, remains above key moving averages, including the 100-day average at US$3.97 1/4.

 

The next upside price objective is to push and close July prices above solid technical resistance at the April high of US$4.17 1/2 a bushel, a technical analyst said. The next downside price objective 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$4.10 and then at this week's high of US$4.13 3/4, the technical analyst said. First support is seen at US$4.00 and then at Tuesday's low of US$3.96 1/2.

 

Midwest Market Solutions said that July corn has resistance at US$4.16 with support at US$4.03 1/2.

 

In outside markets, China's corn prices in major producing areas were mostly stable in the week to Wednesday as farmers don't have much of the latest crop left, but demand remains weak.