September 9, 2009

 

CBOT Corn Outlook on Wednesday: Lower on bearish weather, crop outlook

 

 

Chicago Board of Trade corn futures are expected to open slightly weaker Wednesday as benign weather and a bearish crop outlook weigh.

 

Corn is called 2 to 3 cents lower. In overnight trade, September corn was down 2 cents to US$3.00 3/4 per bushel, December corn was down 2 3/4 cents to US$3.04 3/4 and March corn was down 2 3/4 cents to US$3.18 1/4.

 

Weather forecasters say there is unlikely to be any frost in the U.S. Midwest at least through the next 14 days, which is good for the crop and bearish for the market. Temperatures are also expected to be warm, which should help the crop mature, analysts said. Analysts say the crop will likely threaten or break records this year.

 

Outside markets that gave corn and other commodities strong support Tuesday are friendly again Wednesday, with crude oil higher and the dollar lower. But a trader said "I don't think they're dramatic enough" to boost the market given the bearish crop outlook.

 

Corn was rated 69% good to excellent as of Sunday, unchanged from the previous week, the U.S. Department of Agriculture said in its weekly crop progress report Tuesday. A year ago, 61% of the crop was rated good to excellent.

 

AgResource said that the "unseasonably high" crop ratings were due mostly to the crop's lagging maturity.

 

Half of U.S. corn was dented, below the average of 75%, according to the USDA. A year ago, when development was slowed by Midwestern floods, 59% of the crop was dented at this point.

 

The crop was 8% mature, down from the average of 23%.

 

The next upside price objective is to push prices above solid technical resistance at last week's high of US$3.32 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 Tuesday's high of US$3.10 3/4, and then at US$3.15. First support is seen at Tuesday's low of US$3.02 and then at US$3.00.

 

A trader said that the market could re-test and break below the contract low of US$3.02 in the December contract. That support held overnight trade before Tuesday's day session.

 

"If soybeans lose their legs much, it's definitely going to happen," the trader said.

 

Analysts noted China National Grain and Oils Information Center, a state-supported think-tank, cut output estimates for some of the country's major crops in 2009 from a previous forecast made in its report last month.

 

CNGOIC cut the corn output estimate by 1 million metric tonnes to 165.5 million tonnes despite an increase in acreage, its latest study issued Wednesday said.

 

Traders and analysts said the cut was not a surprise to the trade, and Farm Futures said it was "not generating much enthusiasm."

 

Also, China sold 1.86 million metric tonnes of corn from its reserves Tuesday, slightly below the amount sold last week, according to an official statement.

 

The volume sold was 64% of the 2.9 million tonnes it planned to sell.