January 20, 2010

 

CBOT Corn Outlook on Wednesday: Down 2-4 cents on dollar, technical weakness

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents lower Wednesday on a strong dollar, with the market's slide below recent support overnight prompting more selling.

 

In overnight trade, March corn was down 4 cents to US$3.65 1/4 per bushel and May corn was down 4 1/4 cents to US$3.76.

 

The market has fallen sharply since bearish U.S. government supply estimates were released last week, and the March contract set a new low for the slide overnight, breaking below the previous low of US$3.68.

 

A stronger dollar, which climbed following the election of a new Republican U.S. senator in Massachusetts on Tuesday, is expected to set a negative tone for corn and commodities generally, analysts said.

 

If the dollar does weigh, fundamentally and technically there is little support to underpin the market, traders said. Last week's USDA reports estimated the 2009 crop as being much larger than the trade was expecting.

 

"Buyers are not in a hurry to secure supplies; the thought being, why buy now if it can be purchased lower later?" Top Third Ag Marketing analyst Peter McKeegan said in a commentary.

 

Although traders say it's too early to begin focusing on 2010 planted acreage, a couple analysts nonetheless said there is talk that farmers could plant as much as 6,000 additional acres this year, which would be bearish. Traders and analysts said that a sharp reduction in wheat acreage projected by the USDA could mean that some farmers will be switching to corn.

 

Corn was led lower Tuesday by wheat and soybeans, both of which are also called lower on Wednesday's open.

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.50 a bushel, a technical analyst said. The next upside price objective is to push prices above solid technical resistance at US$3.92 1/2 a bushel, which is the top of the recent downside price gap on the daily bar chart.

 

First resistance for March corn is seen at Tuesday's high of US$3.75 1/4 and then at US$3.80. First support is seen at Tuesday's low of US$3.67 3/4 and then at US$3.62.