February 10, 2010

 

CBOT Corn Outlook on Wednesday: Down slightly, two-sided trade expected

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Wednesday after two-sided trade overnight, as the market lacks strong fundamental news.

 

Corn is called 1 to 3 cents lower. In overnight trade, March corn was up 1 3/4 cents to US$3.56 3/4 per bushel and May corn was up 1 3/4 cents to US$3.68 1/2.

 

Traders said there wasn't much to digest in Tuesday's month supply and demand report from the U.S. Department of Agriculture, and that there appears to be little news on the horizon until the government releases any potential 2009 crop revisions next month.

 

"As far as moving the market, there isn't a fundamental feature to grab on to," said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

Recent gains in the market have been mostly attributed to short-covering, although traders did consider Tuesday's supply and demand report a little friendly.

 

But export business has been relatively slow recently, and on top of large U.S. supplies, analysts are expecting a very large South American crop.

 

Ag Resource Co. said in a morning commentary it "looks for a two-sided trading session with prices unlikely to sustain rallies as South American soy/corn crops start to come to the market."

 

A snow storm that has moved across the Midwest this week creates transportation and logistical challenges typical for this time of year, but is not a major market factor, McCambridge said.

 

The next downside price objective for the bears is to push and close March prices below solid technical support at US$3.40 a bushel, a technical analyst said. Bulls' next upside price objective is to push prices above solid technical resistance at last week's high of US$3.68 1/4 a bushel.

 

First resistance for March corn is seen at Tuesday's high of US$3.63 1/2 and then at US$3.68 1/4, the technical analyst said. First support is seen at Tuesday's low of US$3.54 3/4 and then at US$3.50.

 

In other news, Brazil's foreign trade commission, Camex, said Tuesday that Brazil's 20% ethanol tariff will be maintained.

 

Agriculture Minister Reinhold Stephanes said that the decision on suspending the tariff would be reassessed in June.