October 28, 2009

 

CBOT Corn Outlook on Wednesday: Lower on weather, technical pressure

 

 

Chicago Board of Trade corn futures are expected to open weaker Wednesday amid follow-through selling, technical pressure and better harvest weather in the forecast.

 

Corn is called 4 to 6 cents lower. In overnight trade, December corn was down 5 3/4 cents to US$3.65 per bushel and March corn was down 5 3/4 cents to US$3.77 1/4.

 

Although the weather for much of the U.S. corn belt will be wet in the near-term, longer-term, starting next week, drier conditions are expected that should allow farmers to pick up the pace of their harvest progress.

 

"The producer should be able to restart their combines and harvesting activity," said Terry Reilly, analyst for Citigroup.

 

Rains this week have been focused on the southern and eastern corn belt, DTN Meteorlogix said. Next week's improvements will be most pronounced in the western corn belt, where it will be warmer and drier, according to the forecast.

 

"The brighter outlook for harvest is being accentuated by outside markets, which also are on the verge of a deeper correction," Farm Futures senior editor Bryce Knorr said in a market commentary.

 

The dollar has been key to price action in corn and other commodities recently, and a firm dollar Wednesday could add to the pressure, analysts said.

 

Technically, the market looks bearish after falling sharply from a Friday intraday high of US$4.13.

 

First resistance for December corn is seen at US$3.75 and then at Tuesday's high of US$3.80 3/4. First support is seen at US$3.68 1/2 and then at US$3.65.

 

"One more day of follow-through selling on Wednesday would negate the uptrend on the daily chart and provide the bears with fresh downside technical momentum to suggest that a near-term market top is in place," a technical analyst said.

 

Although the harvest outlook is improving, analysts still note there could be more delays as an abundance of wet corn outstrips the drying capacity in some regions, creating a bottleneck in the supply pipeline.

 

In international markets, China's corn prices in major producing areas were mostly stable in the week to Wednesday, as farmers were reluctant to sell their crops.

 

Farmers kept their crops in anticipation of prices rising further on the back of planned government purchases.