May 26, 2009

 

CBOT Corn Outlook on Tuesday: Down 5-7 cents on planting progress, dollar

 

 

Chicago Board of Trade corn futures are expected to open 5 to 7 cents lower Tuesday following overnight losses on improved planting progress and outside market pressure.

 

In overnight trading, July corn was down 7 cents to US$4.23 1/4 per bushel and December corn was down 6 3/4 cents to US$4.45 1/4.

 

After ideal weather conditions last week that allowed some of the wettest areas of the eastern U.S. corn belt to dry out, rainfall on the weekend held off longer than expected, giving farmers a larger planting window. Ideas that producers made significant progress weighed on the market overnight and will continue to Monday, analysts said.

 

"I'm not ready to declare the bull market over yet," said Vic Lespinasse, analyst for grainanalyst.com. "But for today, I think we're going to be on the defensive all day."

 

Traders said the other key influence in the market is the dollar, which is stronger following last week's slump. A stronger dollar makes U.S. exports less attractive.

 

"I don't think you can overestimate the dollar's tie to these prices," a trader said.

 

The improved planting pace should be reflected in the U.S. Department of Agriculture's crop progress report, to be released Tuesday afternoon. Whereas the trade was estimating progress of 75% to 80% on Friday, they are now expecting progress between 80% and 85%.

 

Farmers who haven't been able to plant are going to have to wait a little longer. The DTN Meteorlogix forecast calls for scattered showers and thunderstorms, with totals from 0.25 to 1.0 inches, throughout the corn belt on Tuesday, with similar amounts expected again on Wednesday. Conditions are expected to be mostly dry Thursday through Saturday.

 

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 for the bears is to push and close prices below solid technical support at US$4.00 a bushel.

 

In other news, speculative funds added 13,436 contracts to their CBOT corn long positions and cut 11,452 contracts from their short positions, leaving them net long 89,354 contracts, the Commodity Futures Trading Commission said Tuesday.

 

The supplemental commitment of traders report also showed that commercial funds added 8,804 contracts to their long positions and added 27,830 contracts to their short positions, putting them net short 254,314 contracts. Index funds added 5,513 contracts to their long positions and added 1,942 contracts to their short positions, putting them net long 271,709 contracts the CFTC said.