September 15, 2009

 

CBOT Corn Outlook on Tuesday: Up 2-4 cents on frost threat next week

 

 

The potential for frost in parts of the U.S. Midwest next week is expected to give Chicago Board of Trade corn futures a boost on Tuesday's open, analysts said.

 

Corn is called 2 cents to 4 cents higher. In overnight trade, December corn was up 4 3/4 cents to US$3.22 1/2 per bushel and March corn was up 4 3/4 cents to US$3.36.

 

Analysts note that forecasts call for cooler weather next week, perhaps significantly cooler. This could mean trouble for the corn crop, which looks good but remains well behind schedule and needs a late frost to reach its full potential.

 

T-storm Weather said in its "Sunrise Snapshot" Tuesday that with the cooling trend, "the chance for a substantial frost cannot be ruled out" for the middle or end of next week in northern corn growing areas.

 

The forecast should give corn some strength, traders said, although one said "it's hard to get carried away given the yield potential we have."

 

This week, temperatures have remained warm, which is favorable to the crop.

 

Most expect that the crop should post a record U.S. yield exceeding 160 bushels per acre, and many think the yield will climb above the U.S. Department of Agriculture's September estimate of 161.9 bushels per acre as "big crops get bigger."

 

There are exceptions, however. Shawn Hackett, president of Hackett Financial Advisors, said in a report that the late-maturing crop could have good, but not record-setting yields. He said that although ear populations are at record highs, past history shows that ear weight could be lower than expected.

 

The USDA said in its weekly crop progress report Monday that 69% of the corn crop was in good-to-excellent condition, the same as the prior week. Traders and analysts were expecting the rating to hold steady or drop by as much as two percentage points.

 

The USDA said that 66% of the crop was dented as of Sunday, up from 50% the prior week, but below 76% last year and the five-year average of 86%.

 

Traders and analysts say that demand has been solid as prices have lingered close to US$3, as buyers emerge when the market slumps.

 

Outside markets are seen as a minor influence Tuesday morning, according to traders.

 

The next upside price objective is to push December prices above solid technical resistance at US$3.37 a bushel, a technical analyst said. 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 last week's high of US$3.20 1/4 and then at US$3.25. First support is seen at Monday's low of US$3.15 1/2 and then at US$3.08 1/2.