June 24, 2008

 

CBOT Corn Outlook on Tuesday: Up slightly; tracking crude, weather

 

 

Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher Tuesday, as the market follows weather forecasts and outside markets in the absence of significant news, analysts said.

 

In overnight trading, July corn was up 1/2 cent to US$7.24 3/4 per bushel, September corn was up 1/4 cent to US$7.39, and December corn was up 3/4 cent to US$7.60.

 

After Monday's government crop progress report that mostly fell in line with expectations, traders are looking ahead to the U.S. Department of Agriculture's June 30 report on planted acreage, analysts said.

 

"Right now we're waiting to see what Monday's report is going to be," said Jerry Gidel, grain analyst for North American Risk Management Services. "But that's a long way away. Normally that would cause the market to sag."

 

In the meantime, the market could track crude oil prices, analysts said. Crude was higher early Tuesday morning.

 

After several days of mostly clear skies that helped many fields dry out, rain is about to return, said Drew Lerner, senior agricultural meteorologist with World Weather Inc.

 

"The entire Midwest will get rain between now and the end of the weekend," Lerner said. "There should be no exceptions."

 

Parts of Iowa and Wisconsin, which have been hard-hit by flooding, will see the most rain, Lerner said, with totals between 1 and 2 inches. But many areas have seen considerable drying during the past couple weeks, and the rain should be beneficial for most of the Midwest, Lerner said.

 

The U.S. Department of Agriculture's crop progress report released Monday was in line with traders' expectations. The USDA said the good-to-excellent condition rating for the U.S. corn crop was 59%, 2 percentage points above the previous week but well below last year's 73% rating.

 

Although the trade is looking ahead to Monday's acreage report, analysts say the report could be of questionable value because it won't fully incorporate the flood impact. Many farmers who would be surveyed have been too busy trying to recover and gauge the damage for themselves, Gidel said.

 

"The most important guys you need to get a hold of are the ones who aren't going to be around to talk," Gidel said.

 

The USDA is conducting additional surveying this week because of the flooding, but will also issue another report in August.

 

The next upside price objective is to push and close December prices above technical resistance at the contract high of US$7.91 1/2 per bushel, a technical analyst said. The next downside price objective is to push and close prices below solid support at Monday's low of US$7.38.

 

First resistance for December corn is seen at Monday's high of US$7.61 1/2 and then at US$7.65, the analyst said. First support is seen at US$7.50 and then at US$7.45.