November 10, 2009

 

CBOT Corn Outlook on Tuesday: Steady-up slightly following USDA report

 

 

Traders are mixed on Tuesday's open for Chicago Board of Trade corn futures, as any gains from a mildly friendly government report could be limited by a bearish soybean report and a corrective tone following Monday gains.

 

Corn is called steady to slightly higher following the U.S. Department of Agriculture's report on crop production and ending stocks.

 

The U.S. Department of Agriculture projected the corn crop at 12.921 billion bushels, down from the October estimate of 13.018 billion. The yield was estimated at 162.9 bushels per acre, down from the October estimate of 164.2 bushels per acre

 

The estimates were lower than trade expectations, but not significantly. Analysts on average had estimated a crop of 12.955 billion bushels, with a yield of 163.7 bushels per acre.

 

Some traders said the report would give the market a little strength, but others said that after Monday's gains the market will be hard-pressed to charge higher.

 

"It's a little surprising that the USDA wasn't more aggressive than they could have been," said Terry Reilly, analyst with Citigroup. "I don't see anything bullish in the corn. USDA didn't tinker with demand as much as we thought. It also failed to change the harvested area. It's going to follow beans lower."

 

The USDA estimated 2009-10 ending stocks at 1.625 billion bushels, down from the October estimate of 1.672 billion and also below the average trade estimate of 1.650 billion bushels. The report lowered exports by 50 million bushels.

 

"As a whole, this report was bullish yield/bearish exports--with the market rallying, and no help from wheat likely, I'd call it overall a neutral report especially given that we have a lot of crop to still get in," Mike Zuzolo, president of Global Commodity Analytics and Consulting, said in a morning report.

 

In overnight trade, December corn was down 3 cents to US$3.83 per bushel and March corn was down 2 3/4 cents to US$3.97 1/2. That retreat followed gains of almost 20 cents Monday on bullish outside markets. A couple analysts said the friendly report was already factored in on Monday's gains.

 

The crop remains well behind schedule despite the increased harvest activity, according to Monday afternoon's weekly crop progress report from the USDA.

 

The corn harvest was 37% complete as of Sunday, up from 25% a week ago but far below the average of 82%, according to the USDA. The progress was within trade expectations that harvest would be roughly 35% to 43% complete.

 

DNT Meteorlogix said that outside the northwest corn belt, the weather should be good for drying until Sunday. The northwest corn belt could see rains on Friday that would delay harvest once again.

 

The next upside price objective is to push and close prices above major psychological resistance at US$4.00 a bushel. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.59 1/4 a bushel.

 

First resistance for December corn is seen at Monday's high of US$3.88 1/4 and then at US$3.95. First support is seen at US$3.80 and then at US$3.75.