June 16, 2009

 

CBOT Corn Outlook on Tuesday: Seen up 2-5 cents on soft dollar, rebound

 

 

Chicago Board of Trade corn futures are poised to start 2 to 5 cents per bushel higher Tuesday in a rebound from losses Monday and with support from a weak U.S. dollar.

 

In overnight electronic trading, CBOT July corn rose 4 cents to US$4.10. CBOT December corn edged up 3 3/4 cents to US$4.31 1/2.

 

Weakness in the dollar should help lift the market after CBOT December corn Monday fell to its lowest price since May 6 amid technical selling and pressure from a stronger dollar, traders said. Expected gains in equities and crude oil add support Tuesday, they said.

 

Corn could encounter lingering technical pressure after falling below key moving averages Monday, an analyst said. "Serious near-term technical damage has been inflicted" in the market, a market technician said.

 

The U.S. Department of Agriculture's weekly crop progress report, issued Monday, was largely as expected. Seventy percent of the crop was rated good-to-excellent as of Sunday, up from 69% last week.

 

"The crop condition rating that was out yesterday afternoon was in line with trade expectations and should have little effect this morning," said Tomm Pfitzenmaier, analyst at Summit Commodity Brokerage. "The corn market is expected to see some turnaround recovery [Tuesdy] with some in the trade feeling like [Monday] was a bit overdone and the outside markets are on the positive side this morning."

 

Concerns about the corn crop, while still present after very late planting in the eastern corn belt, have subsided for now, analysts said. Weather for the crop looks "favorable" for the near term, a CBOT trader said. Scattered thunderstorms and warmer temperatures in the Midwest are beneficial for developing crops, according to private weather firm DTN Meteorlogix.

 

"The corn crop, despite the lateness of its planting, is doing quite well in the USDA's eyes," said Dennis Gartman, publisher of the Gartman Letter. "We have farmers in the Midwest telling us rather differently, but we've no choice but to 'go with' what the USDA has said."

 

The bulls' next upside price objective is to push and close CBOT July corn above solid technical resistance at US$4.30, a technical analyst said. The next downside price objective for the bears is to push and close the contract below psychological support at US$4.00, he said.

 

First resistance is seen at US$4.10 and then at US$4.15. First support is seen at Monday's low of US$4.05 1/2 and then at US$4.00.

 

In other news, South Korea's Major Feedmill Group bought five Panamax cargoes totaling 275,000 tonnes of optional-origin and U.S.-origin corn in private deals with Cargill and Toepfer concluded late Monday, a trader said.