November 4, 2009

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on weaker dollar, technical buying

 

 

Chicago Board of Trade corn is expected to open stronger at Wednesday's open, as a weaker dollar and gains in crude oil continue to feed this week's rally.

 

Corn is called 2 to 4 cents higher. In overnight trade, December corn was up 4 3/4 cents to US$3.94 3/4 per bushel and March corn was up 4 1/4 cents to US$4.07 3/4.

 

Other markets are setting a bullish tone, traders and analysts said, with a weaker dollar expected to steer more money into corn and other commodities.

 

"It's another day where we've got commodity interest, although waning maybe just a little bit," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The December contract has gained 24 cents the past two days with seemingly little fundamental reason. The gains have created technical momentum which has fueled more fund-buying, analysts said.

 

"Most analysts are scratching their heads in an attempt to determine if there is anything fundamentally tied to the type of price action that has been seen over the past couple of days, with most coming up empty-handed," Benson Quinn Commodities analyst Jon Michalscheck said in a market commentary.

 

Weather is "the anchor," Roose said. DTN Meteorlogix is calling for mostly dry conditions in the U.S. corn belt through Sunday, and analysts said that while some rain is expected later next week, forecasts Wednesday are a little drier than they were a day ago.

 

The drier weather should be allowing for improved harvest activity, which would weigh on the market, although farmers are expected to harvest their soybeans first.

 

The trade is looking ahead to two private firms' estimates for the crop--one to be released during morning trade, the other after the market closes. Traders say the bias for the Nov. 10 supply and demand report from the U.S. Department of Agriculture appears to be toward a smaller crop projection.

 

Bulls' next upside price objective is to push and close prices above major 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 this week's low of US$3.59 1/4 a bushel.

 

First resistance for December corn is seen at Tuesday's high of US$3.96 1/2 and then at US$4.00, the technical analyst said. First support is seen at US$3.84 and then at US$3.80.