July 1, 2009

CBOT Corn Outlook on Wednesday: Rebound expected after fall on acreage

Chicago Board of Trade corn futures are expected to open higher Wednesday as overnight trading bumped prices up after Tuesday's acreage report shocked the market.

Corn is called up 2-4 cents. In overnight trade, July corn was up 4 1/4 cents at US$3.52 a bushel, and December was up 4 cents at US$3.71 1/4.

Analysts and traders said Wednesday will likely see a price rebound after the U.S. Department of Agriculture's acreage report surprised the market by pegging corn acres at 87.035 million, much higher than expected. Many corn contracts dropped by the exchange-imposed daily trading limit of 30 cents Tuesday, but the market recovered a bit overnight on outside markets, a floor trader said.

"You can't go down forever," said Sid Love with Kropf & Love Consulting. Strong demand leading old-crop soybeans helped that market turn around Tuesday, which is adding support to corn, he said. Traders and analysts said the corn market was oversold Tuesday.

Traders and analysts are also citing supportive outside markets, as crude oil, gold and silver are stronger, stocks are expected to be stronger and the U.S. dollar is weaker. Support is also coming from the upcoming Independence Day weekend. Grain trading will be closed Friday in observance of the holiday.

After the bearish acreage report, the market is looking to weather for clues. Midwest corn weather will see some showers across northeastern areas but dry conditions elsewhere with temperatures near to below normal, DTN Meteorlogix said.

"The crop is not made yet," Love said, citing late planting in the eastern corn belt. He said though favorable weather conditions are forecasted and supply is strong, things could change. "Today, we have enough corn, but what will happen in the future when we start looking for 2010 acres?" Love said. "Will we see more beans planted or more corn planted?"

"Corn bears have the solid near-term technical advantage," said a technical analyst. He pegs the next downside price objective for the bears below strong technical support at December corn's low of US$3.49 1/4. The technical analyst said first resistance for December corn is seen at US$3.75 and then at US$3.80, and first support is seen at US$3.60 and then at US$3.55.