October 29, 2008
CBOT Corn Outlook on Wednesday: Up 6-8 cents on follow-through buys, equities
Surging equities are expected to send Chicago Board of Trade corn futures higher at the open, following large gains Tuesday in the U.S. stock markets and a climb in grains overnight.
Corn is called 6 to 8 cents higher. In overnight trading, December corn was up 8 3/4 cents to US$3.99 1/2 per bushel, and March corn was up 8 3/4 cents to US$4.17.
U.S. equities, which boosted corn Tuesday, surged even higher after the grains markets closed, setting the stage for corn's gains in the overnight session. Early orders suggest bids above the overnight closing price, Farm Futures said in a morning commentary.
Stocks are seen as the main driver of the market, but corn also got a boost from the U.S. Department of Agriculture's unprecedented revision of its crop production and ending stocks estimates Tuesday. The government cut planted acreage, yield, total production and carryout. Although cuts were also made to soybeans, traders said the numbers were more friendly to corn. The report could help the market reverse its bearish technical momentum, a trader added. Corn has fallen sharply in recent weeks, hitting US$3.64 in the Dec contract on Monday, less than half its peak in late June.
A weaker dollar and stronger crude oil are also expected to support the market early Wednesday.
Weather is favorable for harvest, with dry weather and warmer temperatures expected during the next week.
Demand remains slow, analysts said. In export news, Taiwan purchased 40,000 metric tonnes of U.S. corn and 61,500 metric tonnes of corn from Brazil, analysts noted.
Seasonally the market typically bottoms out this time of year to put in a harvest low, a technical analyst said.
The next downside price objective is to push and close December prices below solid technical support at this week's low of US$3.64, the technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$4.27 3/4.
First resistance for December corn is seen at US$4.00 and then at Tuesday's high of US$4.09 3/4, the technical analyst said. First support is seen at Tuesday's low of US$3.85 3/4 and then at US$3.71.