February 25, 2009
CBOT Corn Outlook on Wednesday: Up slightly; technical support, lack of news
Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher Wednesday following overnight gains as the market awaits direction from outside markets amid a lack of its own news, traders said.
In overnight trading, March corn was up 1 3/4 cents to US$3.56 per bushel, May corn was up 1 1/2 cents to US$3.64 1/2 and July corn was up 1 1/2 cents to US$3.74.
Traders said there is little news for the market to digest, and that outside markets are mixed. The market, which climbed Tuesday, appears to have support around US$3.50 in March, although another break in the stock market could send corn lower, traders said.
"Corn has trended tentatively higher this week as technical support levels have held; the rebound yesterday in the equity markets also seemed to provide some mild support," Country Hedging analyst Brian Liedl said in a morning commentary.
Spread activity has dominated activity this week as traders roll out of March positions with first notice day approaching Friday, a trader said. Open interest in corn is at "multi-year lows," the trader said.
He added there is some concern about end-of-month fund liquidation this week, although he thinks fund selling will not be excessive.
Fortis said in a market commentary that the market is "in the same limbo as soybeans," as the stock market, economic concerns and uncertainty about government action supersede other factors.
Strong export demand in recent weeks is providing underlying support, traders and analysts said, and has helped the market stay above US$3.50. The government will release weekly export sales Thursday at 8:30 a.m. EST. Traders say net sales could be lower this week.
Traders said concerns about a possible farmers strike in Argentina is mildly friendly, but that it appears it could be several days before any definitive news emerges from that situation.
The next downside price objective is to push and close prices below solid longer-term technical support at US$3.50 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at US$3.90.
