November 17, 2009

 

CBOT Corn Outlook on Tuesday: Lower amid profit-taking, dollar gains

 

 

Chicago Board of Trade corn futures are expected to open on the defensive Tuesday amid bearish outside markets and profit-taking following Monday's gains.

 

Corn is called 4 to 6 cents lower. In overnight trade, December corn was down 4 3/4 cents to US$3.97 1/2 per bushel and March corn was down 4 1/2 cents to US$4.13.

 

Traders said following Monday's gains that the corn market, along with many others, seem poised for a "turnaround Tuesday." The dollar, whose weakness fueled Monday gains, is stronger Tuesday.

 

"Everything is flip-flopped from yesterday," a trader said.

 

Monday marked only the second time since June that the front month closed above US$4, but fundamentals do not seem to support prices that high, traders and analysts said.

 

"Even though there is a strong tailwind of technical strength, dollar weakness, and eager fund buying, demand is not so strong that prices appear to be able to stay above the US$4.00 region for any extended period of time," Western Milling analyst Joel Karlin said.

 

Export demand in particular remains weak, traders and analysts said. The market did get a boost Tuesday morning, however, as the U.S. Department of Agriculture announced the sale of 209,983 metric tonnes of corn to Mexico.

 

Losses could be limited by wet weather in the Midwest that is slowing harvest this week in many areas.

 

At a time when the corn harvest is usually wrapping up, barely more than half has been taken from the fields, the USDA said in its weekly crop progress report Monday.

 

The corn crop was 54% harvested as of Sunday, up from 37% the prior week but well below 77% last year and the five-year average of 89%. Analysts were expecting anywhere from 50% to 60% of the harvest to be complete.

 

The bulls' next upside price objective is to push and close March prices above solid technical resistance at the October high of US$4.24 1/2 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 last week's low of US$3.79 a bushel.

 

First resistance for March corn is seen at last week's high of US$4.18 and then at US$4.24 1/2, the technical analyst said. First support is seen at US$4.10 and then at Monday's low of US$4.05.