CBOT Corn Outlook on Wednesday: Down 2-4 cents; technical selling, poor demand weigh

 

 

Chicago Board of Trade corn futures are expected to open lower Wednesday on overnight losses as the market dips on technical pressure.

 

Corn is called 2 to 4 cents lower. March corn was down 3 3/4 cents to US$3.73 3/4 per bushel, May corn was down 3 3/4 cents to US$3.84 3/4 and July corn was down 4 cents to US$3.95 1/4.

 

The market followed up Tuesday's close below its 10- and 50-day moving averages with more technical selling overnight.

 

"I think it got caught with a technical lean" said Don Roose, president of U.S. Commodities in Des Moines.

 

Roose said the market would likely open weaker, but that outside markets, which weighed overnight, appear to be gaining some momentum, and that U.S. equities are also poised to open higher. These factors could limit corn's losses, as could a slightly drier forecast for Argentina Wednesday morning, Roose said.

 

Wetter weather in drought-stricken Argentina has weighed on corn and soybeans the past couple days, but a trader noted that "these forecasts change every two hours."

 

Stress continues on pollinating corn through central Argentina, according to DTN Meteorlogix, and "weekend showers were not enough to end concerns."

 

Weak demand and concerns about further demand reduction due to the global recession continues to loom over the market, analysts said.

 

The market is already getting itself prepared for the upcoming USDA supply and demand report, which will be released Feb. 10, Dennis Gartman wrote in Wednesday's edition of The Gartman Letter. He said there are rumors that demand destruction has been so severe during the past three weeks that 2008-09 carryout might be pegged at or above 2 million bushels.

 

"That is clearly a psychologically important rather than a physically important level, and its mere suggestion was sufficient to send corn prices sharply lower," Gartman wrote.

 

The next downside price objective for the bears is to push and close March prices below solid technical support at the January low of US$3.58 3/4 a bushel, a technical analyst said. The bulls' 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$3.80 and then at US$3.85, the technical analyst said. First support is seen at last week's low of US$3.76 1/4 and then at US$3.70.