November 19, 2008
CBOT Corn Outlook on Wednesday: Up slightly following overnight gains
Chicago Board of Trade corn futures are expected to open slightly higher in early trading following overnight gains, as the market looks to outside markets for direction amid a weak demand picture.
Corn is called 1 to 2 cents higher. In overnight trading, December corn was up 1 1/2 cents to US$3.81 1/2 per bushel and March corn was up 1 1/2 cents to US$3.98.
The market has remained range-bound in recent days, and analysts do not expect corn to move dramatically unless prompted by outside markets.
"It's almost beginning a holiday-type attitude, although that's a week away," said Don Roose, president of U.S. Commodities in Des Moines.
Outside markets will continue to factor heavily in corn, as the trade remains skittish in light of concerns about the U.S. and world economies. Slightly lower crude oil could add pressure to corn, Roose said. Corn maintains a strong tie to crude oil because of corn's use in ethanol.
Weak export demand is bearish for the market and is limiting any upside potential, analysts said. The slowdown in the economy is depressing demand, although traders note soybean demand has been stronger thanks to China.
The weather is mixed, traders said. On the one hand, U.S. conditions are considered mostly favorable for the harvest, analysts said, with mostly dry conditions through the weekend, particularly in the western U.S. corn belt.
But South America, particularly Argentina, continues to suffer from drought, which is hindering corn planting, traders add.
Some traders are eyeing the corn-wheat spread, which has fluctuated significantly during the past couple weeks. Wheat's rallies have been limited by resistance to the spread growing beyond US$1.70, a trader said. It is about US$1.50 prior to Tuesday's open.
A trader said the December options expiration, which is Friday, is having a mixed effect, if any, on the futures market. He said there are US$3.70 puts and US$4 calls in the options pit, which is helping keep futures in its current range. Open interest in futures will drop significantly after the December options expire, he added.
The next downside price objective is to push and close December prices below solid technical support at last 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 this week's high of US$3.89 1/2 and then at US$4.00. First support is seen at Tuesday's low of US$3.78 1/2 and then at this week's low of US$3.75.