July 14, 2009

 

CBOT Corn Outlook on Tuesday: Up; outside support, market seen oversold

 

 

Chicago Board of Trade corn futures are expected to open higher Tuesday following overnight gains amid supportive outside markets, traders said.

 

Corn is called to open 2 cents to 4 cents higher. In overnight trading, September corn was up 4 cents to US$3.35 3/4 per bushel and December corn was up 3 3/4 cents to US$3.43 1/4. July corn, which expires at noon Tuesday, was down 1 cent to US$3.58.

 

Although there is little bullish news in the market, a weaker dollar and strength in crude oil and equities could push the market higher, traders said.

 

Selling has been exhausted after the market's recent plunge, and a trader said corn was "a little overdone." On Monday corn closed higher following wheat, which another trader said was "way, way, way overdone." An analyst said that wheat might be the first market on the trading floor to bottom, and it could be followed by corn.

 

Weather remains bearish, however, with widespread rainfall coverage expected this week and an absence of heat in the forecast, just as the crop approaches its crucial pollination period.

 

"Most analysts seem to agree that cool temps during pollination equate to higher yields," Mark Gold, managing partner of Top Third Ag Marketing, said in a market commentary.

 

The July contract has been firm while the other contracts have fallen, as farmer selling has been very limited, analysts note. The July contract's premium could drag September higher once July goes off the board, analysts said.

 

A trader said farmers that enjoyed good revenue last year can afford to "sit and wait for higher prices" before selling.

 

But Jon Michalscheck, analyst for Benson Quinn Commodities, said in a commentary that "there are indications that old crop supplies are adequate, so it has to be just a matter of time until the stocks are moved in order to make room for the new crop."

 

In export sales, a group of South Korean feedmillers led by the Korea Feed Association is seeking 110,000 metric tonnes of U.S.-origin corn, a trader with the KFA said.

 

The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$3.58 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below strong longer-term technical support at US$3.25 a bushel.

 

First resistance for December corn is seen at Monday's high of US$3.39 3/4 and then at US$3.45, the technical analyst said. First support is seen at US$3.35 and then at the contract low of US$3.28.