February 2, 2010

 

CBOT Corn Outlook on Tuesday: Up 2-3 cents amid continued technical bounce

 

 

Chicago Board of Trade corn futures are expected to open higher Tuesday as a technical bounce from January's sharp losses continues.

 

Corn is called 2 cents to 3 cents higher. In overnight trade, March corn was up 3 1/2 cents to US$3.62 1/2 per bushel and May corn was up 3 1/4 cents to US$3.73 1/2.

 

The market was also slightly higher on Monday, but traders and analysts say the renewed strength is nothing for bulls to get excited about.

 

"I don't think we have a great deal of upside potential, but we've pretty much exhausted selling interest, at least at this level," said Shawn McCambridge, senior grains analyst for Prudential Bache.

 

The market could consolidate during the next several days heading into the Feb. 9 supply and demand report from the U.S. Department of Agriculture, analysts said.

 

Large supplies are the main bearish feature of the market, which had been trading around US$4.25 in the first part of January. A big 2009 U.S. crop, expectations that farmers will plant even more acres in 2010 and favorable South American growing conditions have all kept the market under pressure.

 

Amid that backdrop, traders are looking for signs that the recent price break is stimulating demand. But Country Hedging analyst Christopher Steinhoff said in a Tuesday commentary that export sales recently have been merely "routine."

 

Gains in other markets such as equities and crude oil are giving prices a little boost Tuesday, traders said. Traders also note that farmers are refusing to sell at current low levels.

 

Technical analyst Jim Wyckoff said the fact that corn could only manage slight gains Monday despite a weaker dollar and gains in equities and crude was "another bearish clue."

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.50 a bushel. The next upside price objective for bulls is to push prices above solid technical resistance at US$3.73 a bushel.

 

First resistance for March corn is seen at Monday's high of US$3.60 3/4 and then at US$3.63 1/2. First support is seen at last week's low of US$3.55 1/4 and then at US$3.50.