June 29, 2009

 

CBOT Corn Outlook on Monday: Lower start expected, looking to acreage

 

 

Chicago Board of Trade corn futures are expected to open lower Monday following modest overnight losses as the market looks forward to Tuesday's acreage report.

 

Corn is called down 1 to 2 cents. In overnight trade, July corn was down 1 3/4 cents at US$3.82 1/2 a bushel and December was down 3 cents at US$4.01 1/4.

 

Monday's dominate theme will likely be consolidation as the trade awaits the U.S. Department of Agriculture's acreage and grain stocks reports, which will be released Tuesday at 8:30 a.m. EDT. Marty Foreman of Doane Advisory Services also said slightly stronger crude oil prices could assist the market.

 

The trade's average guess for seeded corn acres is about 84.158 million acres, a reduction of the USDA's March estimate of 84.986 million acres. Quarterly grain stocks for corn are estimated at 4.190 billion bushels, slightly higher than last year's stocks at this time of 4.028 billion bushels.

 

Fairly favorable crop weather is pressuring the market, analysts said.

 

A DTN Meteorlogix forecast said generally favorable corn crop conditions are expected to develop in the Midwest over the next week to 10 days. Dry Midwest conditions, with a few light showers, are expected to continue throughout the week, with near-normal temperatures throughout the area. "Rainfall across the western Midwest will benefit crop development," the forecast said.

 

A price surge from a smaller than expected acreage of corn could be mitigated if weather remains favorable, as it is forecasted this week, said a market commentary from MF Global Research.

 

The upcoming week is expected to be busy in the corn market, analysts said. Aside from the USDA reports, the transition into Independence Day weekend marks the start of the summer weather market, the MF Global Research market commentary said. "Late June/early July typically marks peak in ag market option volatility," the commentary said.

 

Turning to a broader outlook, a market commentary from Risk Management Commodities Inc. said the current economic recession will likely decrease ethanol blending. "This makes the supply-side even more important due to the fact that the greater the acres and potential yield here in the U.S., the less likelihood there will be extra demand to offset it," the market commentary said.

 

December corn prices are still in a three-week-old downtrend on the daily bar chart, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at US$4.30 a bushel. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.90 a bushel, the technical analyst said. First resistance for December corn is seen at Friday's high of US$4.06 1/2 and then at US$4.11 1/4. First support is seen at Friday's low of US$3.99 1/4 and then at US$3.90.

 

In export news, private exporters reported export sales of 118,000 metric tonnes of corn for delivery to unknown destinations, USDA said Monday.