August 19, 2009

CBOT Corn Outlook on Wednesday: Lower start with no fresh bullish news

Corn futures at the Chicago Board of Trade are called to open modestly lower Wednesday morning, as a lack of fresh bullish fundamental news weighs down the market.

December corn was last traded in overnight electronic trading down 3 cents a bushel at US$3.19 1/2.

"Weather in the Corn Belt continues to be non-threatening," said Don Roose, veteran market analyst with U.S. Commodities in Des Moines. Scattered rainfall chances and no extreme heat in the forecast for the U.S. midsection continue to suggest the corn crop will continue to mature with no problems. However, Freese-Notis weather points in a report that "crop progress and crop condition numbers released on Monday afternoon confirmed what the markets already knew: we have some nice-looking corn and soybean crops this year, but it is going to be a race to get them all to maturity before we see our first fall frost."

Roose said the recent weakness in the Chinese stock and commodities markets is spilling over into selling pressure in the U.S. grain futures markets. China's commodity futures took a tumble overnight, led by plummeting steel prices. Steel futures hit their 5% lower limit, while the benchmark copper contract on the Shanghai Futures Exchange settled 1.5% lower. On the Dalian Commodity Exchange, the benchmark soybean contract also lost 1%.

The Pro Farmer Midwest Crop Tour found an average Indiana corn yield of 157.35 bushels per acre, which compares to last year's yield of 163.82 bushels and a three-year average of 154.13 bushels per acre. The average Nebraska corn yield came in at 158.82 bushels per acre, compared to 141.82 bushels last year and the three-year average of 141.55 bushels per acre. Wednesday, the eastern leg of the tour will take samples from Bloomington, Illinois, to Iowa City, Iowa, while western Belt scouts will sample from Nebraska City, Nebraska, to Spencer, Iowa. Final Tour results from Illinois will be released Wednesday evening.

Technically, the corn 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. First resistance for December corn is seen at this week's high of US$3.25 3/4 and then at US$3.30. First support is seen at Tuesday's low of US$3.18 and then at the July low of US$3.14 3/4 and then at this week's low of US$3.11 1/2.