June 3, 2009

 

CBOT Corn Outlook on Wednesday: Lower; outside pressure, market overbought

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents lower Wednesday on profit-taking and a rebound in the dollar, analysts said.

 

In overnight trading, July corn was down 3 1/2 cents to US$4.46 per bushel, September corn was down 3 3/4 cents to US$4.56 and December corn was down 3 1/4 cents to US$4.69 1/2.

 

The market has been boosted by fund buying, analysts said, but it was lower most of Tuesday on profit-taking and ideas the market was overbought until fund buying prompted a late surge, which took the market to a new seven-month high.

 

Analysts said the markets appeared to be consolidating overnight after strong recent gains, which have largely been driven by a weaker dollar. A stronger dollar and weaker crude oil are expected to pressure corn Wednesday.

 

"I think the overbought conditions are likely to pressure our market here this morning," said Shawn McCambridge, senior grains analyst for Prudential Bache. "But just as we saw yesterday, the market has very solid support resting underneath, so the downside should be limited."

 

Traders continue to monitor the weather, which some see as supportive because of continued rains in Illinois and Indiana, where farmers are almost out of time to get their corn planted. The DTN Meteorlogix forecast calls for rains in the southern and eastern part of the U.S. corn belt through Thursday. Friday through Sunday, the western and northwestern corn belt will see rain.

 

Most analysts say that total corn acreage this year will be less than the U.S. Department of Agriculture projected in March due to the soggy spring. But at this point the wet weather, while delaying what planting is still left to complete, is seen as beneficial for most of the crop.

 

"The 93%-plus that's been planted generally has very good conditions at this point," McCambridge said.

 

Technically, the market has resistance at US$4.50 and US$4.53, FuturesTechs said in a report. Support is at US$4.43 and US$4.40.

 

"Above US$4.53, resistance may be hard to find as we climb back through the levels seen during the slump last year," the report said.

 

In international markets, corn prices in China's northeast major producing areas were stable in the week to Wednesday, but rose in the mid regions as the market expects the government to sell corn at higher prices.