October 21, 2009

 

CBOT Corn Outlook on Wednesday: Down slightly as outside markets weigh

 

 

Chicago Board of Trade corn futures are expected to open lower Wednesday following overnight losses amid outside market pressure.

 

Corn is called 2 to 3 cents lower. In overnight trade, December corn was down 2 cents to US$3.82 1/2 per bushel and March corn was down 2 1/4 cents to US$3.94 1/2. May corn was up 1 1/4 cents to US$4.06 3/4.

 

Along with lower crude oil prices, equities also appear to be weaker. This should help set a bearish tone for commodities, despite the fact that the dollar remains weak, analysts said.

 

"It could be that the commodity sector as a whole is taking a little bit of a breather after the recent run-up," a trader said.

 

Analysts add that the market has failed to take out near-term technical resistance. The December contract has been unable to top last week's high of US$3.88 1/2 and also remains stuck below its 200-day moving average at US$3.90 1/2.

 

But Farm Futures notes in a morning commentary that "selling remains rather light due to an absence of harvest pressure."

 

Although some progress has been made in recent days, lousy weather is returning to the Midwest. Forecasts are mostly seen as supportive, as more harvest-delaying rains move across the U.S. corn belt Wednesday and Thursday, and forecasts call for more soggy weather next week.

 

"The outlook for next week includes some risk for more heavy rains and more very cool conditions, especially later in the week," DTN Meteorlogix said in a forecast.

 

The sluggish harvest pace is keeping supplies tight and supporting prices, unusual for this time of year, analysts say. But a trader said that basis, the difference between cash and futures prices, has still weakened this week.

 

The next upside price objective is to push and close December prices above psychological resistance at US$4.00 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 last week's low of US$3.61 3/4 a bushel.

 

First resistance for December corn is seen at Tuesday's high of US$3.89 1/2 and then at US$3.95, the technical analyst said. First support is seen at US$3.80 and then at US$3.75.