February 11, 2009

Chicago Board of Trade corn futures are expected to open slightly slower Wednesday as weakness in soybeans and the broader economy weigh, analysts said.

 

Corn is called 2 to 3 cents lower. In overnight trading, March corn was down 3 1/4 cents to US$3.73 1/2 per bushel, May corn was down 3 1/2 cents to US$3.83 1/2 and July corn was down 3 1/4 US$3.94.

 

Analysts said there is currently little supportive news to rally the market, which has been range-bound between US$3.50 and US$4 for most of the past two months.

 

"We've reached some kind of maturity here; we're looking for some kind of catalyst to go higher," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The most likely catalyst is weather in South America, Roose said. Although forecasts seem drier Wednesday morning, they go back-and-forth, he said.

 

The market dipped slightly lower Tuesday despite a USDA supply and demand report that some saw as supportive. A plunge in the U.S. stock market weighed, and the recession continues to make for a bleak demand outlook for commodities, analysts said.

 

But the corn market also seems unwilling to move lower, some analysts said.

 

The market "had every reason to sell off" Tuesday, said Benson Quinn Commodities analyst Jon Michalscheck, "but it can't seem to generate enough downward momentum, and that has to be supportive to price action for the bulls."

 

Michalscheck added in a market commentary that the trade could be reluctant to selloff ahead of weekly export sales data that will be released Thursday morning. U.S. export sales have been strong three weeks in a row.

 

Farm Futures noted that open interest fell by almost 17,000 contracts Tuesday, "suggesting a surge of profit taking when corn couldn't hold its early rally attempt."

 

The market is just below its 20-day and 50-day moving averages in the March contract.

 

The next downside price objective is to push and close prices below solid technical support at last week's low of US$3.55 3/4 a bushel, a 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 Tuesday's high of US$3.80 and then at this week's high of US$3.83, the technical analyst said. First support is seen at US$3.72 1/2 and then at US$3.70.