June 23, 2009

 

CBOT Corn Outlook on Tuesday: Steady-up slightly; modest correction

 

 

Chicago Board of Trade corn futures are expected to open steady to slightly higher Tuesday, but the market's attempt at a correction could be limited by good crop weather and a bearish technical trend, analysts said.

 

Corn is called steady to 1 cent higher. In overnight trade, July corn was up 1/4 cent to US$3.85 1/2 per bushel and December corn was up 1/2 cent to US$4.06.

 

After gapping lower, below trend-line support in Monday's trade, technically the market is under considerable pressure, analysts said. FuturesTechs said in a morning report that "we are in full-on bear mode."

 

The technical damage on Monday "may keep buyers on the sidelines," Farm Futures senior editor Bryce Knorr said in a morning commentary. Knorr also noted, however, that "markets are oversold and due for a bounce."

 

Traders and analysts add that outside markets, including the dollar, crude oil and soybeans, are modestly supportive.

 

The weather continues to be bearish, with hot temperatures and with ample rainfall giving the crop what it needs, analysts say.

 

A technical analyst said "it will now take a serious weather scare in the next few weeks to reignite a bull market run in corn."

 

The bulls next upside price objective is to push and close December prices above solid technical resistance at US$4.50 a bushel, the technical analyst said. The next downside price objective for the bears is to push and close prices below strong technical support at US$3.90 a bushel.

 

Joe Victor, vice president/marketing for Allendale, said July futures have slight technical support at US$3.77, followed by key support with a double bottom at US$3.70. Overhead resistance is at US$3.99, Victor said.

 

A floor trader said that end-users should provide underlying support, adding that "US$4 Dec is a pretty good value." Last year at this time, prices were up over US$7.

 

The USDA reported Monday that 70% of corn was in good-to-excellent condition as of Sunday, unchanged from the previous week. Traders had expected the rating to be between steady and up two percentage points.

 

The USDA's report was in line with what the trade anticipated and is seen as neutral, Victor said.

 

As with soybeans, good-to-excellent ratings rose in Iowa but fell in Indiana and Illinois. In Iowa, 81% of the corn was rated good to excellent, up from 78% last week. The crop was 51% good to excellent in Illinois, down from 55% last week, and 62% good to excellent in Indiana, down from 66% last week.