March 25, 2009

 

CBOT Corn Outlook on Wednesday: Down as outsides weigh; consolidation

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents lower Wednesday on pressure from outside markets, a lack of supportive news and technical weakness.

 

In overnight trade, May corn was down 4 cents to US$3.89 3/4 per bushel, July corn was down 3 3/4 cents to US$4.00 1/2 and December corn was down 4 1/4 cents to US$4.21.

 

Corn's recent upside charge has stalled, and barring any strong moves in outside markets, the market is expected to consolidate heading into the government's March 31 planting intentions and quarterly grain stocks reports, which analysts say could set the market's direction in ensuing months.

 

After climbing toward US$4 in May corn but failing to sustain rallies above that level, the market has started to drift lower amid low-volume trade, and could continue to do so, analysts said.

 

"It just feels like we've kind of exhausted the buying interest up around this level," said Shawn McCambridge, senior grains analyst for Prudential Bache. "We'll set it back just a little bit and we'll see what the USDA says next week, and that will sort of set the tone for the market as we go into the spring."

 

Outside markets will likely add pressure Wednesday, a trader said, with crude oil and gold lower and the dollar firm. Soybeans, which have underpinned corn recently, are also lower.

 

In export news, the U.S. Department of Agriculture on Wednesday announced private export sales of 116,000 metric tonnes of corn for delivery to unknown destinations in the 2008-09 marketing year.

 

The next downside price objective for the bears is to push and close May prices below solid technical support at US$3.75 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at US$4.25.

 

Once the planting intentions report is released, the trade will begin paying close attention to the weather, McCambridge said. Some traders and analysts say chilly, wet weather forecast for the U.S. corn belt during the next couple weeks are supportive to the market because fieldwork and early planting will be delayed. Others said such worries are still premature.

 

Farmers need a good start to this year's planting season, analysts said, because last year's combination of a late harvest and high fertilizer prices meant they didn't apply as much fertilizer last fall as they normally do.