December 23, 2009

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents as harvest delays persist

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Wednesday on concerns about the amount of corn that remains in farmers' fields.

 

Corn is called 1 to 2 cents higher. In overnight trading, March corn was up 1 1/4 cents to US$4 and May corn was up 1 1/4 cents to US$4.10 1/2.

 

The slow harvest pace was highlighted Tuesday by the U.S. Department of Agriculture's weekly crop progress report, which showed the harvest at 95% complete as of Sunday, up from 92% the prior week.

 

Based on acreage and yield estimates, that means roughly 645 million bushels remain in the fields, said Jerry Gidel, an analyst with North America Risk Management Services. The USDA usually does not issue crop progress reports at this time of year because the harvest is already done.

 

Farmers still hoping to harvest their crop before spring will continue to be stymied, as a storm bears down on the U.S. Midwest Wednesday that will dump snow in the north and west corn belt and a mix of precipitation elsewhere. Country Hedging says the "impending snowpocalypse" will support prices Thursday.

 

Analysts say that leaving the crop in the field through the winter makes it vulnerable to "lodging," or falling down because of wind and snow.

 

"While it is still probable that most of this crop will still get harvested, it raises concerns about quality and yield loss," Country Hedging analyst Brian Liedl said in a morning commentary.

 

The late harvest also means that the Jan. 12 crop report from the USDA, usually the final word on the prior year's crop, will paint an incomplete picture, analysts said.

 

Technically, the market continues to hover around several key moving averages that have converged around the US$4 mark. While traders have said that light-volume holiday trading could lead to top choppy price action, so far this week the market has traded a very tight range around US$4.

 

Bulls' next upside price objective is to push and close March prices above strong technical resistance at last week's high of US$4.13 3/4 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$3.90 a bushel. First resistance for March corn is seen at Tuesday's high of US$4.02 and then at this week's high of US$4.06 1/2. First support is seen at Tuesday's low of US$3.93 1/2 and then at US$3.90.

 

Traders and analysts add that weak demand is limiting the market's upside potential.