November 5, 2008
CBOT Corn Outlook on Wednesday: Steady to 2 cents higher, waiting for direction
U.S. corn futures are expected to open flat to 2 cents a bushel higher Wednesday, as prices seek direction in the post-election atmosphere, though pressure may come from lower crude oil and a weak open on Wall Street.
Overnight, December corn gained 2 1/4 cents to settle at US$4.15 1/4, and March added 2 1/4 cents to end at US$4.33 a bushel.
The U.S. dollar is firm in early trade, sparking weakness in some commodity markets. December crude oil is seeing sharp 3.3% losses in electronic trade, which will likely put pressure on corn futures, a trader said. In addition, gold is down slightly in early action.
Most traders and analysts chalk the commodity weakness up to a buy-the-rumor, sell-the-fact situation after Sen. Barack Obama was elected the next U.S. president. Obama garnered a resounding majority of 349 electoral votes to Sen. John McCain's 162, according to The Wall Street Journal Online.
The markets staged an Election Day rally Tuesday in anticipation of the change in command, and Wednesday will likely see some selling on ideas the rally was overdone and as traders sell the fact.
Though corn posted decent gains Tuesday, it did not get enough follow-through buying to pierce resistance.
"Corn prices rallied sharply Tuesday, but the December corn contract still failed to penetrate resistance at US$4.25, leaving the market vulnerable," said Arlan Suderman, market analyst at Farm Futures.
"Follow-through strength is needed in the days ahead, but doing so will likely require continued support from the outside markets," he said.
Traders continue to watch the weather forecasts as rainy conditions and colder temperatures begin to move into the western corn belt. The rainy weather will move east Wednesday and Thursday, bringing an end to the recent spell of favorable harvest and drying weather, DTN Meteorlogix said. The wetter, cooler conditions may continue for the next six to 10 days, particularly in southern and eastern areas of the Midwest.
In export news, Taiwan is tendering for 84,100 metric tonnes of U.S. and South American corn, an analyst said.