CBOT Corn Outlook on Tuesday: Up 7-9 cents on dollar, late crop

 

 

Corn is called 7 to 9 cents higher. In overnight trade, December corn was up 9 1/2 cents to US$3.51 per bushel and March corn was up 9 3/4 cents to US$3.64.

 

The weakness in the dollar is setting a supportive tone for corn and other commodities, as soybeans, wheat, crude oil and gold are also pointing higher, traders said.

 

Weather is also supportive, according to many traders. Forecasts are both wet and cold, which will delay the late-developing crop’s maturation, stall its harvest and damage the crop that is unprepared for the first freeze of the season.

 

MF Global vice president for research Rich Feltes said in a market commentary that while he is "most confident" selling rallies in soybeans and wheat, "corn is in another orbit with delayed harvest, delayed crop development, a hard freeze over key areas next weekend, increasing estimates of '09/’10 U.S. ethanol use and [a] basing chart pattern."

 

The U.S. Department of Agriculture showed in its weekly crop progress report Monday that development continues to lag.

 

The USDA said that 57% of the crop was mature, up from 37% the prior week but still well below the five-year average of 84%.

 

Among the states furthest behind is key corn producer Illinois, where only 41% of the crop was mature, down from 73% last year and the average of 93%. Indiana, another key producer, was only 51% mature, compared with the average of 85%, and Minnesota’s crop was only 37% mature, compared with the average of 77%.

 

As a result, harvest is running behind schedule, with only 10% of the crop harvested, compared with 13% last year and the average of 25%.

 

The crop was planted late this year, developed slowly, and needed a late first frost this year, analysts said.

 

Although some say the continued slow development is supportive, others say that at this late stage of the growing season a frost won’t take a significant bite out of the final crop size. Western Milling analyst Joel Karlin said the crop has already "dodged a bullet" for the second year in a row. Expectations of a large, potentially record crop have weighed on the market all season.

 

The next upside price objective is to push 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 today’s high of US$3.50. First support is seen at US$3.37 1/2 and then at US$3.35.

 

Ethanol is also on traders’ radar screen, with signs of climbing demand and, on Monday, rumors that Brazil is importing a couple cargoes of U.S. ethanol supporting the market.