CBOT Corn Outlook on Tuesday: Down 8-10 cents as prices turn around

 

 

U.S. corn futures are expected to open 8-10 cents a bushel lower as prices reverse from a strong rally Monday in typical turnaround Tuesday fashion, traders and analysts said.

 

Speculative selling in crude oil and precious metals is expected to spill over into the Chicago Board of Trade grain pits.

 

In overnight trade, September corn was down 8 cents to US$5.45 and December was 9 1/4 cents lower at US$5.63 1/2 a bushel.

 

In addition to the reversal, traders may be somewhat disappointed that corn ratings did not decline in Monday afternoon's weekly Crop Progress report from the U.S. Agriculture Department. Corn in good-to-excellent condition held steady at 67% in the week to Aug. 17, after many traders and analysts had expected a decline of one to two percentage points.

 

Adequate subsoil moisture and the absence of heat-related stress have been supportive for crop development, one analyst said, though the crop is also likely suffering from a lack of growing degree days.

 

Maturity levels continue to run well behind the average, making corn in northern areas of the belt susceptible to an early frost. Just 49% of the corn had reached the dough stage of development, down significantly from the 68% five-year average.

 

The USDA said 97% of the crop had silked, up from 93% last week but behind the average of 99 percent.

 

Warmer weather this week is expected to benefit developing corn, though there are still local areas in the Midwest that remain too dry, mostly in the north and far east as well as southeastern Nebraska, private forecaster DTN Meteorlogix said.

 

In the western corn belt, conditions will be mostly dry Tuesday and Wednesday, with a chance for light showers through southern and east-central areas on Thursday. Friday and Saturday will bring rain totaling 0.10-0.75 inch in eastern and southern areas of the belt, along with above-normal readings.

 

The eastern Midwest is expected to be mostly dry Tuesday and Wednesday, with scattered showers of 0.10-0.75 inch seen Friday and Saturday and above-normal temperatures, Meteorlogix said.

 

Meanwhile, traders are keeping their eyes on results coming out of the 2008 Pro Farmer Midwest Crop Tour, where participants on the eastern leg tagged the Ohio crop with a yield of 148.75 bushels per acre, up from the 2007 estimate of 144.31 bushels. The crop varied widely in the state, with the highest yield estimates found in western Ohio.

 

Variable results were also reported on the western leg of the tour, which pegged the South Dakota crop at 147.62 bushels per acre, up from just 111.42 bushels on last year's tour. The crop was in various stages of development, and participants said about two-thirds of the crop remains vulnerable to an Oct. 1 freeze.

 

Technically, December corn attempted to move into an upside gap at US$5.77 1/2 to US$5.82, which remains the top end of a broad trading range for now, said Bryce Knorr, senior editor with FarmFutures. He pegs initial support for December corn at US$5.50 a bushel.

 

In other markets, September crude oil is down 80 cents at US$112.07 a barrel and December gold is US$13.70 lower at US$792.10 an ounce at 9:08 a.m. EDT.

 

The U.S. dollar is firm against the euro and the Japanese yen.