May 19, 2009

 

CBOT Corn Outlook on Tuesday: Up 3-5 cents on sluggish planting pace

 

 

Chicago Board of Trade corn futures are expected to open higher Tuesday following overnight gains on the slow planting pace of the crop.

 

Corn is called 3 cents to 5 cents higher. In overnight trading, July corn was up 4 3/4 cents to US$4.26 1/4 per bushel and December corn was up 5 1/2 cents to US$4.47.

 

Although Monday's government crop progress report was in line with estimates, it nonetheless highlighted the fact that the crop is well behind schedule, traders and analysts said.

 

"What can you say when one of the largest corn states in the United States is 20% seeded?" said Don Roose, president of U.S. Commodities in Des Moines, referring to Illinois. "That's just a low number."

 

Corn seeding continues to lag behind the average pace, with the U.S. Department of Agriculture estimating 62% of the crop planted as of Sunday, up from 48% the prior week but down from the five-year average of 85%. The trade had expected plantings to be 60% to 65% complete.

 

As expected, the biggest delays were seen in the eastern corn belt. Only 20% of the Illinois crop was planted, compared to 73% last year and the average of 92%, and Indiana farmers had planted only 24% of the crop, compared to the average of 83%.

 

Weather forecasts calling for dry weather all this week in the corn belt are considered bearish for the market, and some analysts say that if farmers can get the crop planted over the next several days that it should turn out fine.

 

"Usually by now we're starting to say by now we have an idea on what the acres are and we have a rough idea on the yield," Roose said. This year, acreage and yield remain uncertainties, and "consequently, this market wants to keep risk premium in it."

 

The USDA reported that 30% of the crop was emerged, up from 24% last year but below the average of 49%.

 

A trader said outside markets were mixed, with crude oil retreating from overnight gains but the dollar still having "a definite negative bias," which is positive for U.S. exports.

 

The next upside price objective is to push and close prices above solid technical resistance at the January high of US$4.49 1/4 a bushel, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at US$4.00 a bushel.

 

First resistance for July corn is seen at Monday's high of US$4.28 1/2 and then at last week's high of US$4.34. First support is seen at US$4.17 1/4 and then at US$4.10.