May 12, 2009

 

CBOT Corn Outlook on Tuesday: Up 6-8 cents on tight ending stocks from USDA

 

 

Chicago Board of Trade corn futures are expected to open 6 cents to 8 cents higher Tuesday on overnight gains and a supportive government report on ending stocks.

 

Analysts said U.S. ending stocks projections for both old and new crop, as well for world ending stocks, highlighted a tight supply situation for corn.

 

The U.S. Department of Agriculture's supply-and-demand report cut its 2008-09 ending stocks projection to 1.600 billion bushels from last month's estimate of 1.700 billion. Analysts on average expected the carryout at 1.711 billion, with the lowest estimate in the survey at 1.645 billion.

 

The government pegged 2009-10 ending stocks at 1.145 billion bushels, below the average analyst estimate of 1.383 billion.

 

"The real concern jumps out to the new crop, both in the U.S. and the world, as ending stocks are slashed down to under 1.2 billion," said Don Roose, president of U.S. Commodities in West Des Moines. He also noted that the weather remains wet in the Corn Belt, and that concerns remain about acreage and yield.

 

"That means we keep risk premium in this one," Roose said.

 

Rich Balvanz, with AMS Commodities in Marion, Iowa, said it appears "they have certainly accounted for a delayed planting for a sizable portion of the Corn Belt, resulting in less than optimum yields.

 

"At this point the corn market looks a whole lot more promising than we would have estimated a few months ago," he said.

 

The USDA estimated world ending stocks for 2009-10 at 128.2 million metric tonnes, down from 139.6 million for 2008-09.

 

Eastern Corn Belt delays are a focus of the market, with more wet weather expected to hinder growers.

 

The USDA said Monday that 48% of the corn crop was in the ground as of May 10, on par with last year but below the five-year average of 71%..

 

In Illinois, 10% of the crop was planted, down from 55% last year and the average of 84%. In Indiana, 11% of the crop was planted, down from 57% last year and the average of 70%. Ohio's crop was 22% seeded, down from 47% last year and the average of 68%.

 

In overnight trade, May corn was up 3 cents to US$4.16 1/2 per bushel, July corn was down 3 1/2 cents to US$4.24 3/4 and December corn was down 3 1/2 cents to US$4.43 3/4.

 

Prices are in a steep three-week-old uptrend on the daily bar chart, a technical analyst said.

 

The next upside price objective is to push and close July prices above solid technical resistance at the January high of US$4.49 1/4 a bushel, the technical analyst said. 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$3.96 1/2 a bushel.

 

First resistance for July corn is seen at Monday's high of US$4.25 and then at US$4.28. First support is seen at Monday's low of US$4.13 and then at US$4.10.