January 21, 2009

Chicago Board of Trade corn futures are expected to open lower Wednesday on follow-through selling, as the market awaits fresh fundamental news and direction from outside markets, analysts said.

 

Corn is called 2 cents to 4 cents lower. In overnight trading, March corn was down 2 3/4 cents to US$3.80 3/4 per bushel, May corn was down 3 1/4 cents to US$3.91 1/2 and July corn was down 3 1/2 cents to US$4.02.

 

The market could trade both sides Wednesday, said John Kleist, broker/analyst for Allendale in McHenry, Ill.

 

"I see a struggle as March tries to maintain its composure around its major moving averages," Kleist said.

 

March corn is sitting just above its 50-day moving average of US$3.80 1/2. The market is below its 10-day moving average of US$3.91.

 

Weak demand is keeping a lid on the market, analysts said. That demand was highlighted in last week's U.S. Department of Agriculture supply and demand report, which projected 2008-09 corn ending stocks at 1.790 billion bushels.

 

"The corn has kind of been proving, especially since the last USDA report, that there's little justification to be over US$4 in March corn," Kleist said.

 

That report, along with the ongoing global recession, looms over the market, analysts said.

 

A drought in Argentina remains supportive, traders said. The DTN Meteorlogix forecast calls for more dry conditions there, with no rain in the forecast until Sunday.

 

Also, Farm Futures noted that "basis strengthened on yesterday's declines, because farmers are unwilling sellers below US$4."

 

The market will look to the dollar and crude oil, but those markets are not providing any strong direction Tuesday morning.

 

Trading has turned choppy in corn, which does not favor the bulls after prices had been trending higher from early December to early January, a technical analyst said.

 

The next downside price objective is to push and close March prices below solid technical support at last week's low of US$3.58 3/4 a bushel, the technical analyst said. The next upside price objective is to push and close prices above major psychological resistance at US$4.00.

 

First resistance for March corn is seen at US$3.90 and then at US$3.95. First support is seen at Tuesday's low of US$3.76 1/4 and then at US$3.70.