July 29, 2009

 

CBOT Corn Outlook Wednesday: Steady-to-down 2 cents; crop outlook weighs

 

 

Chicago Board of Trade corn futures are expected to open steady to slightly lower Wednesday as an optimistic crop outlook continues to pressure the market.

 

In overnight trading, September corn was up 1 cent to US$3.21 1/2 per bushel while December corn was down 3/4 cent to US$3.29.

 

Traders and analysts say there is little fundamental support for the market, given expectations of strong, perhaps record U.S. corn yields this year. Weather remains bearish, with moderate temperatures and adequate rainfall in most areas.

 

Outside markets could pressure corn, with weaker crude oil and a stronger dollar setting a bearish tone, analysts said.

 

Traders say the market appears to be settling into a sideways pattern. Corn held above its 10-day moving averages Tuesday but was unable to make a run at its 20-day averages. Resistance came from "the market's perception that the crop size is growing at a faster rate than demand and a one to two week weather forecast that most feel is beneficial for crop development," Benson Quinn Commodities analyst Jon Michalscheck said in a market commentary.

 

But many traders and analysts say it will be tough to push the market much further. The crop looks good, and is enjoying good weather, but in many areas it remains well behind schedule after being planted late.

 

"We're not pushing things along here very fast," said Jerry Gidel, analyst with North America Risk Management Services.

 

That could leave it vulnerable to an early frost of freeze, analysts said.

 

The next upside price objective is to push prices above solid technical resistance at US$3.56 3/4 a bushel, which would fill on the upside a downside price gap on the daily bar chart, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at the contract low of US$3.14 3/4 a bushel.

 

First resistance for December corn is seen at last week's high of US$3.40 and then at US$3.45, the technical analyst said. First support is seen at US$3.25 and then at this week's low of US$3.23 1/4.