June 10, 2009

 

CBOT Corn Outlook on Wednesday: Up 3-5 cents on outside markets, USDA report

 

 

Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Wednesday following overnight gains and a USDA supply and demand report that was considered slightly friendly.

 

The report cut new crop ending stocks as expected, pushing the projection closer to 1 billion bushels, due to weaker production.

 

But traders and analysts said the report would mostly take its cue from outside markets, with support from a weaker dollar and stronger crude oil.

 

Prices climbed overnight. July corn was up 4 cents to US$4.48 per bushel and December corn was up 4 cents to US$4.70 1/4.

 

Overall the government report "lacked anything negative," said Jack Scoville, vice president of Price Futures Group.

 

"The USDA sent a signal that new-crop corn would have reduced yields and acres based off weather conditions, and that should provide a boost to new-crop prices as traders may be a little surprised the USDA made the moves before the June 30 acreage and quarterly stocks reports," Scoville said.

 

The report cut 2009 production to 11.935 billion bushels, down from the USDA May estimate of 12.090 billion. Acreage was left unchanged for now but the yield was cut to 153.4 bushels per acre, down from the May prediction of 155.4 bushels.

 

Although the report cut feed and residual demand by 100 million bushels, overall the 2009-10 ending stocks are projected at 1.090 billion bushels, down from the May estimate of 1.145 billion. Old crop ending stocks were left unchanged.

 

With the report out of the way, the trade will continue to monitor crop development and await the June 30 acreage report, which the trade has considered crucial to prices for the rest of the summer.

 

Traders and analysts say the market maintains a technically strong position. The bulls' 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 this week's high of US$4.46 3/4 and then at US$4.50, the technical analyst said. First support is seen at US$4.40 and then at this week's low of US$4.33 1/4.