February 24, 2010

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents in bounce from Tuesday losses

 

 

Chicago Board of Trade corn futures are expected to open higher Wednesday as the market bounces back from losses Tuesday.

 

Corn is called 2 to 3 cents higher. In overnight trade, March corn was up 3 cents to US$3.70 3/4 per bushel and May corn was up 3 cents to US$3.81 3/4.

 

Overnight gains were supported by a weaker dollar, although analysts noted that weaker crude oil limited the gains.

 

While farmer selling picked up on Monday's rally, which pushed the market to five-week highs, producers will likely be reluctant sellers if prices continue to drift lower as it did Tuesday, an analyst said.

 

"At this point I don't think they're just going to roll over," said Jerry Gidel, analyst with North America Risk Management Services.

 

He added that as long as the weather remains cold, some farmers will feel comfortable holding onto supplies. Once it warms up, producers will get more antsy about their supplies, and the possibility its quality could decline, he said.

 

Gidel and some other analysts say that bulls are hoping to fill in a gap on the March technical chart, between US$3.84 and US$3.92 1/2. Gidel said filling in the gap is unlikely, however.

 

There is little fundamental news for the market to digest currently, "leaving traders little to do but follow outside money managers while juggling cash positions" Farm Futures said in a morning commentary.

 

Fundamentals will become a greater focus in March, as the U.S. Department of Agriculture is expected to release revisions to the 2009 crop early in the Month, followed by the 2010 planting intentions report at the end of the month.

 

Analysts add that export demand has been routine, which is limiting the market's upside potential.

 

The next downside price objective for the bears is to push and close prices below solid technical support at the February low of US$3.59 a bushel, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at this week's high of US$3.87 3/4 a bushel.

 

First resistance for May corn is seen at US$3.80 1/2 and then at Tuesday's high of US$3.84, the technical analyst said. First support is seen at Tuesday's low of US$3.78 1/4 and then at US$3.75.