CBOT Corn Outlook on Wednesday: Up slightly; cold, rains support

 

 

Corn is called 1 to 2 cents higher. In overnight trade, December corn was up 2 1/2 cents to US$3.60 3/4 per bushel and March corn was up 2 1/2 cents to US$3.73.

 

Several factors contributed to strong gains this week, including a weaker dollar, weather forecasts and an improved ethanol outlook, including speculation the U.S. has shipped ethanol to Brazil. The December contract has gained 24 3/4 cents so far this week.

 

DTN Meteorlogix said in a Wednesday forecast that "wet and cool conditions during the next few days will be unfavorable to mature crops and will likely delay the harvest."

 

The forecast also states that immature crops in the north plains and western Midwest could be damaged, but that the cold weather late this week and into the weekend will "help firm the ground and improve conditions for harvest."

 

Although the weather is widely seen as supportive, some analysts question how much upside the market has left, and say that the crop will end up very large anyway, likely above 13 billion bushels.

 

"These prices aren't cheap," said John Kleist, broker/analyst with Allendale. "We're still at a 13-billion-whatever crop."

 

Rich Feltes, vice president for research at MF Global, said the weather could cause a quality problem more than a yield problem.

 

"It's not as if we're having frost on the 22nd of September," Feltes said. "These frosts are occurring at normal dates. So we dodged the early frost bullet this year."

 

But other traders and analysts note that barely more than half the crop was mature as of Sunday, and say the rest is at risk.

 

The trade is awaiting Friday's supply and demand and crop production updates from the U.S. Department of Agriculture. On average, analysts surveyed by Dow Jones Newswires estimate the USDA will project a crop of 12.993 billion bushels, with a yield of 162.7 per bushel.

 

The next upside price objective is to push December prices above solid technical resistance at the August high of US$3.76 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at this week's low of US$3.27 1/2 a bushel.

 

First resistance for December corn is seen at US$3.60 and then at US$3.65, the technical analyst said. First support is seen at US$3.50 and then at US$3.47 3/4.

 

Looking at a December chart, Kleist said that recent history shows the current rally could be short-lived. Prices Tuesday hit their highest level since Aug. 3, and on both Tuesday and Aug. 3, prices gapped higher on the open above the previous day's high of US$3.50. In the previous August rally, prices were back below US$3.50 within three days.