February 24, 2009
CBOT Corn Outlook on Tuesday: Down 2-4 cents on pressure from weak economy
Chicago Board of Trade corn futures are expected to open lower Tuesday as the weak world economy weighs on commodities, analysts said.
Corn is called 2 cents to 4 cents lower. In overnight trading, March corn was down 3 1/4 cents to US$3.48 1/2 per bushel, May corn was down 3 1/4 cents to US$3.57 1/2 and July corn was down 3 3/4 cents to US$3.67.
"Prices are oversold, so we could start to find some support, but that will really depend on what's taking place in the outside markets," said Shawn McCambridge, senior grains analyst for Prudential-Bache. "Right now we just don't have much in terms of fundamentals coming into the market."
A short-covering rally on Monday was stunted by the meltdown in the financial sector, and corn ended only slightly higher.
The market has little of its own news, analysts said. Five consecutive strong weeks of export sales have provided underlying support, because export inspections Monday were lower than expected, and export news has been relatively light this week, analysts said.
Farm Futures senior editor Bryce Knorr said in a morning commentary that "the US$3.50 level remains a battleground for March futures headed into first notice day on Friday."
Corn will continue to be tied to soybeans because of pending planting decisions, analysts said. A recent drop in soybean prices and fertilizer prices has boosted prospects for corn acreage this season, although some analysts say the overall soybean plantings are still favored. Friday is the end of the crop insurance price discovery period for spring crops, Farm Futures noted.
Serious near-term chart damage has been inflicted in corn recently, a technical analyst said, and a seven-week-old downtrend remains in place on the daily bar chart.
The next downside price objective is to push and close March prices below solid longer-term technical support at US$3.50 a bushel, the technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at US$3.90.
First resistance for March corn is seen at US$3.65 and then at Monday's high of US$3.68 1/2, the technical analyst said. First support is seen at Monday's low of US$3.58 and then at US$3.55.
