January 6, 2010

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents in cautious trade; cold supports

 

 

Chicago Board of Trade corn futures are poised to open slightly higher following overnight losses, but sideways trade is expected as traders adopt a cautious tone, participants said.

 

Corn is called 1 to 2 cents higher. In overnight trade, March corn was up 1 1/4 cents to US$4.20 per bushel and May corn was up 1 cent to US$4.30.

 

Harsh winter weather is giving the market modest support, some traders say. The cold weather increases the amount of feed livestock need and is also affecting the movement of grain, they say.

 

The trade is also awaiting index fund rebalancing that is expected to start late this week, which is supposed to be supportive for corn. Shawn McCambridge, senior grains analyst for Prudential Bache, said traders are being cautious ahead of the index fund rebalancing as well as a set of reports the U.S. Department of Agriculture will release Jan. 12.

 

"They have their positions set ahead of next week's USDA reports, and the potential impact from fund rebalancing, and until those two events occur, we're probably just going to see choppy, sideways, range-bound trade," he said.

 

The USDA reports will include updates on the 2009 crop size and grain stocks. There is more uncertainty than usual regarding the crop estimate, given the season's slow harvest, which in some cases hasn't even been completed.

 

Outside markets are seen as a minor influence Wednesday morning.

 

"The dollar's higher, and crude's down a little bit, so that's not helping," a trader said.

 

The bulls' next upside price objective is to push and close prices above strong technical resistance at this week's high of US$4.26 1/4 a bushel, a 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 Tuesday's high of US$4.20 and then at US$4.25. First support is seen at Tuesday's low of US$4.15 1/4 and then at this week's low of US$4.13 1/4.