February 18, 2009
CBOT Corn Outlook on Wednesday: Down 1-2 cents on gloomy economy, weak demand
Chicago Board of Trade corn futures are expected to open slightly lower Wednesday on follow-through selling as the weak world economy continues to weigh on demand.
Corn is called 1 to 2 cents lower. In overnight trading, March corn was down 1 cent to US$3.48 1/4 a bushel, May corn was down 1 1/4 cents to US$3.57 3/4, and July corn was down 1 1/2 cents to US$3.67 1/4.
Prices fell sharply in corn and other commodities Tuesday amid a bearish economic climate, as equities and crude decreased. The corn market traded a tight range overnight, and outside markets are not expected to fall as sharply Wednesday, but traders and analysts say that the economy will continue to hang over the market.
"There's just a general negative global attitude out there," said Joe Victor, vice president of marketing for Allendale.
In export news, the Philippines' San Miguel Corp. (SMCB.PH) has signed a contract to buy around 60,000 metric tonnes of corn from the U.S. for March arrival, a person familiar with the deal said Wednesday.
But Jordan bought 125,000 tonnes of feed barley from the Black Sea region overnight, Victor said, highlighting continued competition for corn. Traders noted that export sales appeared to have waned following four consecutive weeks of strong net U.S. sales.
Victor said that despite Tuesday's sharp drop in futures prices, Gulf basis levels only climbed 3 cents, which he said was "an insult."
"It kind of gives you a broad determination that from the export sector it's just not happening," Victor said.
A trader said the only bullish hope, which is a long shot, is that a rainy weather forecast for Argentina late this week and weekend "underperforms," putting more stress on the soybean crop there. That could support soybeans, which have mostly been the leader of corn.
The next downside price objective is to push and close prices below solid longer-term technical support at US$3.50 a bushel. The next upside price objective is to push and close prices above solid technical resistance at US$3.80.
First resistance for March corn is seen at US$3.66 1/4 and then at US$3.70. First support is seen at Tuesday's low of US$3.55 3/4 and then at US$3.50.
