November 13, 2008
CBOT Corn Outlook on Thursday: Down 1-2 cents following overnight; mixed tone
Chicago Board of Trade corn futures are expected to open slightly lower Thursday on overnight losses as the market looks for direction amid mixed outside markets and a lack of news.
Corn is called 1 to 2 cents lower. In overnight trading, December corn was down 1 1/2 cents to US$3.68 per bushel and March corn was down 1 3/4 cents to US$3.84 1/2.
Outside markets, which have pummeled corn in recent days, were mostly benign overnight, analysts said. Still, sharp drops in crude oil and equities recently has made the trade jittery.
"Any buying enthusiasm will be minimal with fragile outside markets," said Jason Roose an analyst with U.S. Commodities in Des Moines. "But it's kind of a mixed tone."
After setting a new seasonal low at US$3.60 1/4 in the December contract on Tuesday, the market has held above that price. However, Wednesday's close set a new low for the close. Midwest Market Solutions said that puts corn in a bearish technical position, with potential to fall to US$3.36.
Many traders and analysts say the market is badly oversold.
"Is the market over-extended to the downside? Of course it is," Dennis Gartman wrote in Thursday's Gartman Letter. "But it may get even more over-extended, for such is the nature of markets when the situation becomes as extended as this one."
Weak export sales have underscored bearish demand, although Roose said domestic use has been firmer.
Weather is supportive, analysts said. Rain and possible snow in eastern areas of the U.S. Midwest during the next two or three days may mean more harvest delays for corn, according to DTN Meteorlogix. The harvest remains behind schedule.
The next downside price objective is to push and close December prices below solid technical support at this week's low of US$3.60 1/4, a technical analyst said. The next upside price objective is to push and close prices above psychological resistance at US$4.00.
First resistance for December corn is seen at US$3.75 and then at US$3.84, the analyst said. First support is seen at Wednesday's low of US$3.63 1/4 and then at US$3.60 1/4.