March 3, 2009

Chicago Board of Trade corn futures are expected to open 1-2 cents higher Tuesday as traders watch equities regain some footing in the aftermath of market bears' feeding frenzy Monday.

 

In overnight electronic trading, CBOT March corn added 1/2 cent to US$3.44 a bushel; May corn rose 1 cent to US$3.51 1/4 and July corn gained 1/2 cent to US$3.60.

 

Taking cues from upward price movement in equities and crude oil futures, a CBOT floor trader said he anticipates "a little rebound after yesterday's gloom and doom in the markets."

 

Commodity prices slid across the board Monday as the Dow Jones Industrial Average dropped below 6800, a level not seen since 1997.

 

"Commodity prices virtually collapsed yesterday as the weight of a strong U.S. dollar and the weight of globally weak equity prices just kept bearing down upon anything and everything," said Dennis Gartman in his daily market commentary.

 

"Scanning down the list of commodities, one is struck by the seriousness of the declines," Gartman said. "Crude was down 9.5%; livestock prices were down 1.7%; grains were down 2.9%; the base metals were down 2.6% and the "softs" were down 6.3%."

 

In addition to watching outside markets for direction Tuesday, the trader added he is waiting for news on developments in Tuesday's talks between the Argentine government and farmers as the country mulls federal control of the grain and beef trade.

 

A person at Argentina's Production Ministry said that a full monopolization of farm trade wasn't planned, but something that could involve removing export taxes on grain and creating a new trade agency to buy local crops and manage exports.

 

March corn deliveries totaled 968 lots. A customer account at Fortis Americas was the primary issuer at 304 lots; customer accounts at MF Global, Man Professional Clearing and ADM Investor Services were also leading issuers. The house account of Man Professional Clearing was primary stopper.

 

Technical indicators present significant obstacles to any sizable rallies.

 

"Fresh chart damage in corn was inflicted Monday and the bears gained more power," a market technician said, noting the contract hit a fresh 11-week low and a two-month-old downtrend remains in place on the daily bar chart.

 

The bears are pushing to close May corn below solid longer-term technical support at US$3.15 3/4 a bushel, the technician said, placing first support at Monday's low of 3.44 1/2 and then US$3.40.

 

The bulls are aiming to pierce solid technical resistance at US$3.70, he said, pegging first resistance at US$3.55 and then at Monday's high of US$3.62 3/4.

 

Dry weather has caused significant crop damage in Argentina, but some beneficial rains aided filling corn last week, DTN Meteorlogix said.

 

The private weather firm forecast mostly dry conditions with a few light, scattered showers throughout Argentina's corn-growing areas.

 

In other global corn news, the Food and Agriculture Organization said international corn prices fell 5% during February, tracking a fall in crude oil futures and expectations of further cuts in demand for animal feed and ethanol production.