November 26, 2008
CBOT Corn Outlook on Wednesday: Up 2-4 cents; overnight theme, short-covering
Chicago Board of Trade corn futures are expected to open slightly higher Wednesday on short-covering following overnight gains, as the trade continues to consolidate ahead of Thursday's holiday, analysts said.
Corn is called 2 to 4 cents higher. In overnight trading, December corn is up 2 3/4 cents to US$3.56 1/4 per bushel and March corn is up 2 1/2 cents to US$3.73.
More consolidation is expected headed into the Thanksgiving holiday Thursday. Benson Quinn Commodities analyst Jon Michalscheck noted in a market commentary that corn has traded within the previous day's trading range for three days in a row.
"The bulls are holding on for what they believe will be a somewhat traditional holiday week rally while the fundamental traders are looking at an ongoing weak demand outlook," Michalscheck wrote.
The market is oversold, according to some analysts, and traders will be prompted to cover short positions ahead of the holiday. Seasonally, the market usually climbs on the day before Thanksgiving, a couple of analysts said.
But demand remains weak, and "any rally will be technical and construed as a selling opportunity," Country Hedging said in a morning commentary. Both domestic and export demand is weak, analysts said. An abundance of feed wheat is providing stiff competition for corn and keeping pressure on the market.
Analysts noted that Japan made an unusual purchase of Black Sea corn for December shipment of between 75,000 and 100,000 metric tonnes.
Trading volume should be light ahead of the holiday, traders said, which could allow for wider price swings.
First notice day for December corn is Friday. A couple of analysts said the number of deliveries could be high, although they didn't have a specific estimate.
The next downside price objective is to push and close March prices below solid technical support at last week's contract low of US$3.52 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 March corn is seen at Tuesday's high of US$3.73 1/2 and then at this week's high of US$3.77 3/4, the technical analyst said. First support is seen at Tuesday's low of US$3.63 1/2 and then at US$3.60.