September 22, 2009

 

CBOT Corn Outlook on Tuesday: Seen up in gounce; outside markets support

 

 

Chicago Board of Trade corn futures are called to start 2 to 4 cents per bushel higher Tuesday in a rebound from losses Monday and on support from outside markets.

 

In overnight electronic trading, CBOT December corn rose 3 1/2 cents to US$3.19 1/2 per bushel.

 

The market should bounce in a "Turnaround Tuesday" scenario after closing Monday at a 1.5-week low, traders said. Neighboring CBOT soybeans and wheat also are expected to open higher in a turnaround from losses Monday.

 

Supportive signals from outside markets should help boost corn, traders said. The U.S. dollar is falling, while crude oil and gold are higher. A softer dollar makes U.S. grain more attractive to foreign buyers.

 

"The sharply lower U.S. dollar overnight allowed corn, soybeans and wheat to rally," said Brian Hoops, president of Midwest Market Solutions.

 

AgResource Company said in a note that it expected a higher start to the day session but that "large U.S. yield prospects will cap gains." Weather forecasts look non-threatening through the end of the month, traders said.

 

Crops in the Midwest will "continue to benefit from near to above normal temperatures for at least the next five to seven days," according to private weather firm DTN Meteorlogix. Wet weather may cause delays to fall field work and early harvests in some locations, but widespread delays are not expected, the firm said.

 

"This morning's weather forecasts remain frost free for the next 10 days at least," Country Hedging said in a note.

 

Traders are keeping a close eye on the weather as development of the U.S. crop is behind normal. 21% of corn was mature as of Sunday, down from 30% last year and the five-year average of 55%, according to the U.S. Department of Agriculture.

 

The USDA said 68% of corn crop was in good-to-excellent condition as of Sunday, down 1 percentage point from the prior week. Traders said they were not paying much attention to condition ratings anymore as harvest is approaching.

 

"Conditions slipped but nobody cares," a CBOT floor analyst said.

 

Bulls' next upside price objective is to push December corn above solid technical resistance at last week's high of US$3.47 3/4, 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, he said.

 

First resistance for December corn is seen at Monday's high of US$3.17 1/2 and then at US$3.20, the analyst said. First support is seen at Monday's low of US$3.10 and then at US$3.08, he said.