CBOT Corn Outlook on Tuesday: Mixed, pressured by weather, USDA report

 

 

Chicago Board of Trade corn futures are expected to open mixed Tuesday as drier weather and a crop progress report showing slightly better-than-expected crop conditions slow upside momentum.

 

In overnight trading, July corn was down 1/2 cent to US$7.32 a bushel, September was down 1/2 cent to US$7.46 1/4, and December was flat at US$7.65.

 

After setting all-time highs several days in a row, there was two-sided trade overnight, and analysts say corn may have made a short-term top. Monday's crop progress report showed 57% of the crop in good or excellent condition, down 3% from last week. Most traders were expecting a drop, and many were expecting a steeper drop because of widespread U.S. corn belt flooding.

 

"I believe the floor was looking at drops between 4%-6% in the good to excellent ratings, and it was only down 3%," said Terry Reilly, an analyst with Citigroup in Chicago.

 

He said corn may have made a short-term top, and that a correction could push December corn, which closed overnight at US$7.65, down by 25 cents. But Reilly and others said the USDA report still demonstrated the precarious state of the crop. The USDA reported the crop was 95% emerged, up from 89% last week but below the average of 98%.

 

A trader who expects mixed trade Tuesday said the bull market is still intact.

 

"I don't think anyone's ruling out new highs," a trader said.

 

The fate of the crop, and corn prices, could vary widely based on weather patterns, traders and analysts said. In the short-term, dry forecasts are somewhat bearish, they said.

 

DTN Meteorlogix calls for mostly dry conditions across the Midwest Tuesday and Wednesday, and scattered or widely scattered showers through Saturday. Temperatures will be near or below normal, however, which analysts say will limit drying.

 

Reilly said signs of slowing demand could pressure prices. Export sales have been very slow, he said, and there are reports that smaller ethanol plants are going offline because of plummeting margins.

 

Looking at technical chart action, the bulls' next upside price objective is to push and close July prices above technical resistance at Monday's contract high, a technical analyst said. The next downside price objective is to push and close prices below psychological support at US$7.00.