September 9, 2008

 

CBOT Corn Outlook on Tuesday: Down 8-10 cents, outside markets, lacks support

 

 

Chicago Board of Trade corn futures are seen starting Tuesday's day session on the defensive, falling in line with the overnight theme, pressured by outside market influences.

 

Analysts expect corn to open 8 to 10 cents lower.

 

In overnight electronic trading, September corn was 8 1/2 cents lower at US$5.24 1/2, and December corn was 10 cents lower at US$5.39.

 

The lack of any fresh supportive fundamental features, with crops conditions holding steady and beneficial showers for late developing Midwest crops leaving futures following the lead of outside markets, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

Crude oil, gold and silver futures are lower in early action.

 

The path of least resistance is lower and with outside markets pointing down, buyers are poised to take a back seat, McCambridge added.

 

However, a lower U.S. dollar in early action and threat of a frost for late maturing corn crops remain underpinning factors that should limit downside pressure, traders said.

 

The uncertainties of 2008 yields is expected to promote some hesitancy among traders, with recent rains seen aiding crops while the need for an extended growing season keep the market on edge, traders added.

 

A technical analyst said market bears still have some downside technical momentum on their side after Friday's bearish weekly low close. The next upside price objective for December corn is to push and close prices above solid technical resistance at US$5.80 3/4, which would fill on the upside a downside price gap on the daily bar chart. The next downside price objective is to push and close prices below solid technical support at US$5.25.

 

First resistance for December corn is seen at US$5.50 and then at US$5.55. First support is seen at last week's low of US$5.42 1/2 and then at US$5.37.

 

U.S. corn condition ratings held steady last week, according to the U.S. Department of Agriculture's weekly crop progress report released Monday. The USDA said 61% of corn was in good-to-excellent condition as of Sunday, unchanged from last week. Traders had expected the rating to remain unchanged or decline as much as two percentage points.

 

"I'm a little surprised we did not see a lower crop rating on corn, evidence beneficial rains aided the crops," said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

Development continues to lag behind normal. Ninety-one percent of the crop was in the dough stage of development, down from 98% in the same week last year and the five-year average of 96%, according to the USDA.

 

The crop was 62% dented, down from 87% last year and the average of 79%, according to the USDA. USDA reported 11% of the crop was mature, down from 38% last year and the five-year average of 28%.

 

The DTN Meteorlogix Weather Service forecast said temperatures as cool as 37 or 36F are possible early this morning in parts of southern Minnesota and northern Iowa. Shower activity from Monday's cold front and additional showers during the coming days will favor filling crops in the U.S. Midwest. Crops should continue to mature as temperatures stay above freezing during the next 10 days, Meteorlogix said.