May 20, 2008

 

CBOT Corn Outlook on Tuesday: 3-4 cents higher on plantings, emergence

 

 

Chicago Board of Trade corn futures are expected to open 3 to 4 cents higher Tuesday on Monday's crop progress report, traders said.

 

In overnight trading, July corn was up 3 3/4 cents to US$5.90 1/2 per bushel, September corn was up 3 3/4 cents to US$6.03 and December corn was up 3 3/4 cents to US$6.16 3/4.

 

Monday's crop progress report from the U.S. Department of Agriculture supported the market, traders said. The report put corn plantings at 73% complete, up from 51% last week but lower than the five-year average of 88%. Estimates for the report had ranged from 73% to 80%.

 

The report showed 26% of the corn crop was emerged, up from 11% last week but down from the average of 56%.

 

Traders and analysts said emergence will become a bigger issue for the market as the growing season gets underway. Late emergence increases the chance that corn will face excessive summer heat during its crucial growing period.

 

"I think that emergence gave corn a little bit of support overnight," a trader said.

 

Higher crude oil prices and a weaker dollar are also supportive, he added. But traders and analysts expect prices will struggle to break from a sideways trajectory, as the weather appears likely to allow for continued planting, the trader said.

 

John Kleist, a broker/analyst with Allendale in McHenry, Ill., said he expects "two-sided trade with a tilt lower" the rest of this week.

 

July corn has closed below its 50-day moving average two days in a row after not doing so since late March. One trader said he expects the crop progress report and higher crude oil to push prices above that average to US$5.94 today.

 

"I think we'll see a decent bounce," he said.

 

The next upside price objective is to push July corn prices above solid technical resistance at US$6.00, according to a technical analyst. The next downside price objective is to push and close prices below solid support US$5.79 1/4.

 

First resistance for July corn is seen at Monday's high of US$5.93 1/2 and then at US$6.00, the analyst said. First support is seen at Monday's low of US$5.82 and then at US$5.79 1/4.