May 20, 2009

 

CBOT Corn Outlook on Wednesday: Up on weather forecasts, outside markets

 

 

Chicago Board of Trade corn futures are expected to open 2 to 3 cents higher Wednesday on a weaker dollar, bullish soybeans and the possibility of rain returning to the U.S. corn belt next week.

 

In overnight trading, July corn was up 2 1/4 cents to US$4.28 per bushel and December corn was up 2 1/2 cents to US$4.49 1/2.

 

The trade is closely eyeing weather for the weekend and next week to see how long the current window of warm, dry weather will last.

 

WSI AgTrader says in a forecast that a frontal boundary will move into the corn belt this weekend, with the heaviest rains in Nebraska, South Dakota, southern Minnesota and far northwestern Iowa - areas where planting progress has been strong.

 

But by next week that system will bring showers to the central and eastern corn belt, as will another system from the Gulf of Mexico, according to the forecast.

 

The trade is trying to gauge how much planting can get done in Illinois and Indiana before the rain returns. Although the weather this week has been dry and warm, analysts say many areas need several days to dry out after heavy rains last week caused ponding on many fields.

 

"We've got dry weather, but it's not clear that in some of those wettest areas we're going to be able to get much accomplished before the next rain hits," said Marty Foreman, analyst for Doane Advisory Services.

 

Benson Quinn Commodities analyst Jon Michalscheck said in a commentary that eastern corn belt states need 14 to 16 days to finish planting, which "has the market somewhat reluctant to relinquish length until next week's forecast becomes better defined."

 

Corn should also have support Wednesday from a weaker dollar and the continued rally in soybeans, which helped boost prices Tuesday.

 

In demand news, analysts said that Taiwan has purchased 60,000 metric tonnes of U.S. corn. They also noted that South Korea purchased more than 100,000 tonnes of U.S. corn, although the reported amount varied.

 

The next upside price objective is to push and close July 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 Tuesday's high of US$4.29 and then at last week's high of US$4.34, the technical analyst said. First support is seen at Tuesday's low of US$4.20 3/4 and then at US$4.16.