July 8, 2009

CBOT Corn Outlook on Wednesday: Up slightly, modest correction

Chicago Board of Trade corn futures are expected to open modestly higher Wednesday as prices recover from Tuesday's dip.

Corn is called up 1 to 3 cents. In overnight trade, July corn was up 2 3/4 cents at US$3.38 1/4 a bushel and December corn was up 1/4 cent at US$3.36.

Analysts said they expect a modest recovery Wednesday as the market became more oversold Tuesday. "It was a little overdone," a floor trader said. "We're looking for a recovery after yesterday's sell-off." On Tuesday, the December contract slipped to a low of US$3.35 last seen in late December 2006.

Traders and analysts said they are looking toward Friday's U.S. Department of Agriculture supply and demand report. "We're looking for bigger numbers Friday," a floor trader said.

A Dow Jones Newswires survey of analysts found most expect the USDA to keep old-crop carryout close to the same, at about 1.692 billion bushels on average from last month's 1.600 billion. New-crop carryout is expected to be higher, on average about 1.567 billion bushels from last month's 1.090 billion.

Weather is generally favorable for the developing crop. An analyst said weather is the primary factor to watch for the market, especially in July when pollination begins. Dryness and heat can hamper pollination and reduce yield.

DTN Meteorlogix said northern areas of the Midwest can expect thunderstorms Wednesday night and Thursday, but other areas remain dry. By the weekend, wetness will shift to the southern areas and leave northern regions drier, with temperatures near to above normal in the southern Midwest and near to below normal in the northern area, the forecast said.

A technical analyst said first resistance for December corn is seen at US$3.40 and then at US$3.45. First support is seen at Tuesday's contract low of US$3.35 and then at US$3.30, he said.