August 4, 2009

 

CBOT Corn Outlook on Tuesday: Down 3-4 cents amid profit-taking

 

 

Chicago Board of Trade corn futures are expected to open weaker Tuesday amid profit-taking and weaker outside markets, traders said.

 

Corn is called 3 to 4 cents lower. In overnight trade, September corn was down 4 cents to US$3.54 per bushel and December corn was down 4 1/2 cents to US$3.64 1/2.

 

After surging Monday on a weaker dollar and sharply higher soybeans and crude oil, corn and other commodities are primed for a "turnaround Tuesday" as outside markets point lower, traders said.

 

The crop remains behind schedule but is in relatively good condition, according to the U.S. Department of Agriculture's crop progress report issued Monday afternoon.

 

The USDA said 76% of the crop was silking, up from 55% the previous week but down from the five-year average of 89%. Last year, 79% of the crop was in the silking stage.

 

The USDA said that 68% of the crop was rated good-to-excellent, down from 70% the previous week. Traders had estimated a drop of 1-2 percentage points. The rating was 66% at the same time last year.

 

While the drop showed some deterioration in the crop, "that certainly wasn't going to be a supportive factor after a 20-cent rally," a trader said.

 

Views of the weather are mixed, but some analysts say forecasts calling for hot temperatures helped rally corn Monday.

 

"The crop should get some heat over the next couple of weeks to help it catch up; the question is whether that may be too much of a good thing," Farm Futures senior editor Bryce Knorr said in a market commentary.

 

Technically the market is looking very strong, traders said, although it could be set for a correction. Market bears note that a large crop is expected, with many seeing yields around 160 bushels per acre.

 

On Monday, Commodity brokerage firm FCStone on Monday said it estimated 2009 U.S. corn production at 12.814 billion bushels, above the USDA's July estimate of 12.29 billion.

 

FCStone pegged the average corn yield at 160 bushels per acre, up from a USDA estimate of 153.4 bushels.

 

The USDA is slated to issue fresh production and yield estimates Aug. 12 in the first report of the season based on data from actual field surveys. Last year, corn production was 12.101 billion bushels.

 

The corn bulls' next upside price objective is to push December prices above the 50-day moving average at US$3.92, a technical analyst said. That also nearly coincides with a psychological target at the US$4.00 area, and daily congestive chart resistance from late June. The next downside price objective for the bears is to push and close prices below US$3.53 1/4, the July 6 high and the top of the trading range that confined price action for most of the month of July.

 

First resistance for December corn is seen at Monday's high of US$3.76 and then at US$3.90, the technical analyst said. First support is seen at US$3.60 1/2 and then US$3.39.

 

In export news, the USDA on Tuesday announced private export sales of 118,000 metric tonnes of corn for delivery to South Korea in the 2009-10 marketing year.