July 1, 2008

 

CBOT Corn Outlook on Tuesday: Lower on follow-through selling

 

 

Chicago Board of Trade corn futures are forecast to open 12 to 15 cents lower Tuesday on follow-through selling as the market experiences an "adjustment period" following Monday's government report on planted acreage.

 

In overnight trading, July corn was down 15 3/4 cents to US$7.09 per bushel, September corn was down 16 cents to US$7.21 3/4 and December corn was down 15 1/2 cents to US$7.41 1/2.

 

Corn is expected to face continued pressure from the U.S. Department of Agriculture's report on planted acreage and quarterly grain stocks, which in both cases exceeded analysts' estimates. Prices fell 30 cents, the exchange-imposed daily limit, on Monday.

 

"When you have a market that needs a steady diet of bullish news, and you get a report with less-than-bullish news, you run into problems," said John Kleist, broker/analyst with Allendale in McHenry, Ill. "That's what we had yesterday."

 

Analysts said that could continue today. A morning commentary from Farm Futures said the market is "trying to find a bottom."

 

The market could test US$7 for July, which is an important psychological barrier, Kleist said.

 

The USDA said the good-to-excellent condition rating for the U.S. corn crop was 61%, up two percentage points from the prior week. Despite the improvement, the report was seen as neutral by analysts.

 

"It's still not a very good level for this time of year," Kleist said. "I think a lot of people would say the numbers look better than what it really may be."

 

Traders consider the weather somewhat bearish, with generally benign weather forecast for the next several days. DTN Meteorlogix forecasts dry conditions through Tuesday night, with scattered showers and thunderstorms in the western corn belt Wednesday and eastern corn belt Thursday. Friday and Saturday will be dry, except in the far southern corn belt, according to the forecast.

 

July will continue to trade without limits Tuesday because it is in delivery, while the daily trading limit for other contract months will be expanded to 45 cents.

 

Deliveries against July futures fell Tuesday morning to 1,504 contracts, from 1,918 Monday. Analysts said that could provide some support Tuesday, but would be overshadowed by Monday's USDA reports.

 

The next upside price objective is to push and close December prices above major psychological resistance at US$8.00, a technical analyst said. The next downside price objective is to push and close prices below solid support at last week's low of US$7.38.
   

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