May 27, 2009

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents on crop concerns, soy strength

 

 

Chicago Board of Trade corn futures are expected to open 2 to 3 cents higher Wednesday on support from soybeans and concerns about the crop, traders said.

 

In overnight trade, July corn was up 3 1/4 cents to US$4.30 3/4 per bushel and December corn was up 3 cents to US$4.53 1/4.

 

Farmers made significant planting progress in the week ended Sunday, but still remain behind schedule, the government said Tuesday afternoon.

 

The U.S. Department of Agriculture said farmers had completed 82% of their corn plantings as of Sunday, up from 62% the prior week but down from the five-year average of 93%. Analysts had expected progress between 80% and 85%.

 

Illinois plantings were 62% complete, up from 20% the prior week but down from the five-year average of 96%. Planting in Indiana was 55% complete, up from 24% the prior week but below the average of 89%.

 

"The bears will argue that the majority of the crop should be in the ground by the end of the week," Jon Michalscheck, analyst for Benson Quinn Commodities, said in a commentary. "On the other hand the bulls will note that there is still a strong likelihood that of the remaining acres not all will get planted and there could also be some replant."

 

Western Milling analyst Joel Karlin said that although the crop is getting into the ground, the trade will likely remain "reluctant to give up a lot of weather premium because there's a lot of uncertainties, as far as the acreage, and how much acreage will fall from the intentions report." He added that traders also remain cognizant of the adverse effect that late plantings can have on yields.

 

The DTN Meteorlogix forecast calls for rain Wednesday and Thursday, with mostly dry conditions Friday and Saturday before scattered showers and thunderstorms develop again on Sunday.

 

While a hindrance to farmers still trying to plant, the rainfall is beneficial for the crop that's already in the ground, a trader said.

 

Traders say the soybean market remains a leader of the market, as it continues to surge on bullish fundamentals.

 

Prices are still in a five-week-old uptrend on the daily bar chart, but prices have been trading sideways at higher levels now for two weeks, a technical analyst said. He said 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. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$4.06 1/4 a bushel.

 

First resistance for July corn is seen a US$4.31 and then at last week's high of US$4.34 3/4, the technical analyst said. First support is seen at Tuesday's low of US$4.21 3/4 and then at US$4.17 1/4.

 

In other markets, corn prices in China's major producing areas were mixed in the week to Wednesday, as the market awaited the government's policy on the sale of its corn stocks.