September 30, 2009

 

CBOT Corn Outlook on Wednesday: Mixed; report friendly, but stocks ample

 

 

Chicago Board of Trade corn futures are expected to open mixed Wednesday following a mildly supportive quarterly grain stocks report, according to analysts.

 

The government report confirmed healthy supplies, but perhaps not as bearish as some traders expected.

 

The U.S. Department of Agriculture reported fourth-quarter grain stocks of 1.674 billion bushels, below the average trade guess of 1.719 billion. Analysts' estimates ranged from 1.665 billion to 1.803 billion bushels.

 

The fourth-quarter stocks also represent the ending stocks for the 2008-09 marketing year, and are up from last year's stocks of 1.624 billion.

 

"The corn market is kind of caught in between - a positive spin from what the numbers were, but still adequate to large (stocks)," said Don Roose, president of U.S. Commodities in Des Moines. "The government is probably saying feed and residual is higher than we thought."

 

The government's grains stocks report was considered bearish for wheat and soybeans. However, the market could get a boost from weakness in the dollar, which makes U.S. exports more attractive, analysts said.

 

In overnight trade, December corn was down 2 3/4 cents to US$3.38 1/4 per bushel and March corn was down 3 cents to US$3.51.

 

The market will continue to face resistance from the large, possibly record crop that is expected this year. Country Hedging analyst Christopher Steinhoff said in a morning report that "the crop in the field trumps quarterly stocks."

 

Views of the weather are mixed, with some focusing on the cold weather that has hit parts of the northern corn belt this week, as well as the rains that will continue to slow late maturation. Others note that the bulk of the crop remains free of a frost threat. Roose said that temperatures overnight did not get as cold as some had feared.

 

The next upside price objective is to push December prices above solid technical resistance at the August high of US$3.76 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.20 a bushel.

 

First resistance for December corn is seen at the September high of US$3.47 3/4 and then at US$3.50. First support is seen at Tuesday's low of US$3.36 1/4 and then at this week's low of US$3.29.

 

In international markets, corn prices in China's major producing areas stayed largely stable in the week to Wednesday, falling slightly in some areas as output from a new crop starts reaching the market.