CBOT Corn Outlook on Tuesday: Up 10-13 cents on equities surge

 

 

Chicago Board of Trade corn futures are expected to continue climbing Tuesday, riding an equities surge on global economic rescue plans, analysts and traders said.

 

Corn is called 10-13 cents higher, as U.S. stocks rally and crude finds strength. CBOT trade limits return to 30 cents after locking limit down Friday and expanding to a 45-cent limit on Monday.

 

In overnight trading, December corn rose 13 1/4 cents to US$4.24 3/4 per bushel and March corn was up 11 1/4 cents to US$4.40 3/4.

 

"Money flow and open interest are very negative at this time," said Shawn Hackett, president of Hackett Financial Advisors. "Until they show some vigor, prices should remain subdued. Also, commercials are nowhere near being long corn - another bearish sign."

 

But fundamentally, he added, "corn prices are too cheap."

 

As most end users attain profitability with corn in the mid-upper US$3 range, current prices will increase current demand-side expectations in 2009 just as high prices curbed demand in 2008, he said.

 

Predicting that discouraged global corn producers will "likely lower planted acreage next year in response to poor margins and tight credit conditions given corn's high input price points, Hackett declared himself fundamentally bullish corn in 2009. But, he said, "until the money wants to play corn's bullish 2009 story it would seem that harvest pressure will keep the corn bulls in a torturous waiting game."

 

Market bears will be gunning to finish the day's trade below Monday's low of US$3.98 1/4 with first support is seen at US$4.07 and then US$4, a technical analyst said.

 

"We've got a lot of work to do before we get out of this downtrend," a CBOT floor trader said.

 

In trying to break free from a 14-week-old downtrend on the daily bar chart in which the 12-month low was touched, bulls will be trying to close above the US$4.42 1/2 resistance level, but must pass Monday's high of US$4.23 to get there, the analyst said.

 

"The downtrend line remains intact and prices continued to freefall to new lows," Hackett added. "This is bearish although the relative strength index is deeply oversold, suggesting a short term rally may be possible."

 

Traders said they expected about 20% of the nation's corn crop to be harvested when the U.S. Department of Agriculture releases its weekly crop progress report at 4 p.m. EDT Tuesday. The report, usually released Monday, is delayed due to the federal Columbus Day holiday.

 

DTN Meteorlogix forecast calls for showers of up to 3/4 of an inch in the central and western corn belt Tuesday, diminishing as they move east. Light, scattered showers are expected in the north and northwestern parts of the region while dryness should dominate elsewhere for the rest of the week, the private weather forecasting firm said.

 

Despite some rain-related harvest delays, temperatures shouldn't dip below 43 degrees Fahrenheit and should be favorable for harvest, Meteorlogix said.

 

On the international front, Kenya banned the export of corn indefinitely in an attempt to stall "a looming food shortage," a Ministry of Agriculture official said Tuesday.

 

Kenya expects to harvest 31 million bags of corn this year, 1 million bags short of expected consumption, officials said, noting the balance should be imported by April.

 

China didn't export any corn in September, preliminary data provided by the General Administration of Customs showed Tuesday.

 

Total exports in January-September fell 96% on year to 190,000 tonnes, it said, without providing the previous year figure for September.