June 9, 2009

 

CBOT Corn Outlook on Tuesday: Up 2-4 cents on dollar, oversold conditions

 

 

Chicago Board of Trade corn futures are expected to open higher Tuesday following overnight gains amid support from a weaker dollar and higher crude oil, analysts said.

 

Corn is called 2 to 4 cents higher. In overnight trading, July corn was up 4 cents to US$4.39 per bushel, September corn was up 4 1/4 cents to US$4.49 and December corn was up 4 1/4 cents to US$4.62 1/4.

 

The trade is closely tracking movement in the dollar, analysts said, and a weaker dollar Tuesday morning should boost commodities, analysts said. Crude oil, which is tied to corn because of corn's role in ethanol, also appears to be supportive, analysts said.

 

The market is seen as a little oversold following losses Friday and Monday. July corn lost 13 1/2 cents during that period.

 

"There are enough bullish factors, especially in row-crops, for this (overnight) rally to extend into the day session if outside markets cooperate," DTN analyst John Sanow said in a morning commentary.

 

The planting and development of the crop remains a key focus and underlying support for the market, analysts said.

 

Monday's crop progress report from the U.S. Department of Agriculture showed that planting was 97% complete as of Sunday, on par with last year and just below the average of 99%. The plantings were at the high end of estimates, with traders expecting 95% to 97% complete.

 

Analysts pointed out that based on the USDA's March planting intentions report, there are still 2.550 million acres of corn unplanted, not including corn that has to be replanted because of bad weather or acreage that has already been switched to another crop.

 

The crop was 87% emerged, on par with last year, but down from the average of 94%. A week ago, 73% had emerged.

 

Although the eastern corn belt has suffered through a very wet spring, the crop further west has enjoyed a decent start to the year.

 

"The amount of acres still unplanted, as well as re-plant issues in some states along with possible excess acres planted in the West, will still need to be sorted out as we proceed through the crop year as well as the final yield potential," Benson Quinn Commodities analyst Jon Michalscheck in a market commentary.

 

Traders and analysts say that Tuesday will feature positioning ahead of Wednesday's supply and demand report. The USDA will release the report at 8:30 a.m. EDT.

 

In international news, delayed rains and dry weather in Venezuela's Portuguesa state could result in 100,000 fewer hectares planted to corn, according to a U.S. Department of Agriculture attache report posted Monday on the Foreign Agricultural Services Web site.

 

During this season, 230,000 hectares of corn are expected to be planted in Portuguesa, a significant portion of the national projection of 750,000 hectares. Producers believe an urgent review of the price of corn is needed to avoid a collapse in planting next year, according to the report.

 

The next upside price objective is to push and close July prices above solid technical resistance at last week's high of US$4.50 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$4.21 3/4 a bushel.

 

First resistance for July corn is seen at US$4.40 and then at Monday's high of US$4.46 3/4, the technical analyst said. First support is seen at Monday's low of US$4.33 1/4 and then at US$4.30.