January 5, 2010

 

CBOT Corn Outlook on Tuesday: Down 1-2 cents; profit-taking, farmer sales

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Tuesday on technical resistance, profit-taking and commercial selling.

 

Corn is called 1 to 2 cents lower. In overnight trade, March corn was down 1 1/4 cents to US$4.17 1/4 per bushel and May corn was down 1 1/2 cents to US$4.27 1/4.

 

The market is facing technical resistance around US$4.25, after failing to maintain momentum on Monday's early rally, traders said. One trader said that the market might stay stuck in the two-and-a-half-month trading range that has contained it until the U.S. Department of Agriculture's crop production and supply and demand reports. The reports will be released Jan. 12.

 

"The sector is waiting to see the USDA report," a trader said. "Everything else is known."

 

Commercial selling emerged Monday, traders said, as farmers waiting until the new year to make some sales did so on the rally. Traders add that demand remains relatively weak, and is keeping a lid on the market.

 

Uncertainty about the size of the crop is an underlying supportive feature. Cold Midwestern weather continues to keep farmers who need to harvest out of the fields. The cold also boosts feed demand, as shivering livestock need to consume more.

 

Traders add that the market could get modest support Tuesday from a weaker U.S. dollar.

 

There were mixed views on Monday's close technically. Some noted that the market still closed higher despite retreating from early highs.

 

Technical analyst Jim Wyckoff said the "low-range close in corn is a bit worrisome for the bulls, suggesting they may be tired at higher price levels." But he added that bulls still held the near-term technical advantage.

 

The next upside price objective is to push and close prices above strong technical resistance at Monday's high of US$4.26 1/4 a bushel, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.90 a bushel.

 

First resistance for March corn is seen at last week's high of US$4.18 3/4 and then at US$4.25. First support is seen at Monday's low of US$4.13 1/4 and then at US$4.10.