CBOT Corn Outlook: Up Slightly On Global Supply Worries

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U.S. corn futures are expected to open higher Tuesday on global supply concerns as the market flirts with new bull market highs above $6 per bushel.

Chicago Board of Trade futures are called 1 cent to 2 cents higher. In overnight trade, corn for March delivery was up 1/2 cent to $6.

Front-month corn posted its highest settlement since late July 2008 on Monday, but it has been unable to close above $6. It is hovering just below the bull-market high of $6.05 set in November.

Persistent dry, hot weather in Argentina is boosting the market, as the heat could hurt yields in the world's second-largest corn producer.

Traders also say there is ongoing concern about whether U.S. farmers will plant enough acres in 2011 to keep supplies from dipping to dangerous levels. Ensuring enough acres will require relatively high prices to entice farmers.

The March contract is up 15.3% from a Nov. 23 intraday low.

"It's a combination of uncertainties about South American output and the ongoing realization that 2011 is going to be quite an acreage battle," said Jerry Gidel, analyst with North America Risk Management Services.

While farmers typically weigh between planting corn and soybeans based on prices, cotton prices are also soaring, which will encourage farmers in the South to consider planting that instead, adding to the worry over planted acres.

Technically, the market could attract more buying if it pushes past last month's front-month high of $6.05, analysts said.

Technical analyst Jim Wyckoff said bullish traders are targeting the November high of $6.17 1/4 in the March contract.

Traders will be watching for signs that $6 corn is chasing away buyers. For now, the demand outlook remains strong for feed and ethanol, analysts said.

Gidel said that farmers could be eager to sell corn above $6, limiting the market's upside.

-By Ian Berry, Of Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com



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