August 18, 2009

CBOT Corn Outlook on Tuesday: Lower start on follow-through selling pressure

Corn futures at the Chicago Board of Trade are called to open modestly lower Tuesday morning, on follow-through selling pressure from Monday. December corn futures were last traded in electronic overnight trading at down 2 1/4 cents at US$3.19 1/2. December corn on Monday notched a fresh contract low of US$3.11 1/2.

"Weather is the bearish main ingredient" in the corn futures market, said Victor Lespinasse, veteran grain market analyst with grainanalyst.com. Weather in the U.S. Corn Belt remains benign for the U.S. row crops. However, Lespinasse added that "we need an extended growing season" because a significant portion of the corn crop is behind the normal maturity pace.

The key "outside markets" are in a mostly neutral posture for the corn futures market Tuesday morning. Crude oil futures and the U.S. dollar index are trading near steady, while the U.S. stock indexes are firmer.

The latest weekly USDA Crop Progress reports showed the U.S. corn crop conditions unchanged from the prior week. The report showed 19% of the U.S. crop in excellent condition, 49% in good condition, 22% in fair condition and 10% in poor to very poor condition.

Day one of the Pro Farmer Midwest Crop Tour found an average Ohio corn yield of 159.73 bushels per acre, which compares to last year's yield of 148.75 bushels and a 3-year average of 149.04 bushels per acre. The average South Dakota corn yield came in at 146.96 bushels, compared to 147.62 bushels last year and the 3-year average of 120.57 bushels per acre.

The Pro Farmer tour shows "very strong potential for big corn yields," said Lespinasse. Tuesday, the Pro Farmer tour will take samples from Indiana, Illinois and Nebraska.

Technically, the corn market bears still have the solid near-term technical advantage at present. The corn bulls' next upside price objective is to push prices above solid technical resistance at last week's high of US$3.45 a bushel. The next downside price objective for the bears is to push and close prices below major psychological support at US$3.00 a bushel.

Corn futures volume on Tuesday "was decent at almost 220,000 contracts, but open interest shrank by more than 8,000, suggesting longs are giving up bullish bets, at least for now," according to Tuesday morning's Farm Futures Daily report.