July 7, 2009

 

CBOT Corn Outlook on Tuesday: Up 2-4 cents on outside markets, crop ratings

 

 

Chicago Board of Trade corn futures are expected to open higher Tuesday on supportive outside markets and a decline in crop condition ratings.

 

Corn is called up 2 to 4 cents. In overnight trade, July corn was up 2 1/2 cents at US$3.45 3/4 a bushel and December was up 3 cents to US$3.47 1/4.

 

Analysts said the corn market is oversold and a corrective bounce was expected. Higher crude oil and gold prices and a lower U.S. dollar are adding support to grains, traders and analysts said.

 

Unexpected declines in crop ratings also added some strength to the market, a floor trader said. The U.S. Department of Agriculture said late Monday that 71% of U.S. corn was in good-to-excellent condition as of Sunday, down one percentage point from last week. The market expected the rating to remain steady or increase one percentage point.

 

Despite the percentage point decline, however, crop conditions are still better than last year's 62% good-to-excellent rating. "This is a crop on its way to record yields," Dennis Gartman said in a market commentary.

 

Weather conditions remain mostly bearish for the market. "The fact of the matter is that for most of the Midwest, weather so far this growing season has been great with an excellent mix of temperatures and precipitation and the forecasts for the next two weeks look very benign," said Joel Karlin of Western Milling in a market commentary.

 

Over Tuesday and Wednesday, dry conditions with some scattered showers across the northeast Midwest are expected, said DTN Meteorlogix. The forecast calls for near to above normal temperatures moving in this week, giving generally favorable conditions for the developing crop.

 

However, a floor trader said heat expected in the Plains region midweek is helping add slight support. T-storm Weather said hot upper-level high pressure will establish across the Southern Plains through Saturday and Sunday.

 

Weather is vital for the crop as it enters the silking stage. The USDA said 8% of the crop was silking as of Sunday, compared with 5% last year and the average of 16%. Crop development remains slow despite favorable weather.

 

The market is looking toward Friday's USDA supply and demand report for more clues. "We expect grains to erode irregularly lower into Friday's July crop report although a modest recovery [Tuesday] is possible," Rich Feltes said in an MF Global market commentary.

 

First resistance for December corn is seen at US$3.50 and then at Monday's high of US$3.58, a technical analyst said. First support is seen at Monday's low of US$3.43 1/2 and then at US$3.40.