December 1, 2009

CBOT Corn Outlook on Tuesday: Seen opening mixed, watching technicals

Chicago Board of Trade corn futures are expected to start mixed Tuesday and may extend recent gains on supportive outside markets and technical buying, traders said.

In overnight electronic trading, March corn edged up 1/4 cent to US$4.17 3/4 per bushel.

Activity in corn should "once again be dominated by the outside trade," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. Traders will be watching to see whether funds follow the recent pattern of putting new money into the market at the start of the month, he said.

"The dollar is lower and the other markets are higher, so corn is likely to follow along," Pfitzenmaier said.

Traders will be watching corn closely as the market is approaching key technical levels, analysts said. Bulls have upside technical momentum, with prices seen to be in an 11-week uptrend on the daily bar chart, a technical analyst said.

"Technicals and funds are still in control of the trend for now," Global Commodity Analytics & Consulting said in a note. "And I think that they will remain the controlling interest in price discovery until we get closer to the middle of December."

Bulls' next upside price objective is to push and close March corn above solid technical resistance at the November high of US$4.25, the 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$3.90 1/4, he said.

First resistance for March corn is seen at Monday's high of US$4.20 1/4 and then at US$4.25, the technical analyst said. First support is seen at US$4.10 and then at Monday's low of US$4.07 1/4, he said.

Prices have "rallied right up to the old highs and this is the level where prices have failed in the past," Pfitzenmaier said. If the market breaks out to the topside, it may attract some new buying, he said.

The U.S. Department of Agriculture said private exporters sold 116,000 tonnes of U.S. corn to unknown destinations for delivery in the 2010-11 marketing year. The corn marketing year begins Sept. 1.

The USDA said it was extending its crop monitoring activities by an extra week due to the late harvest, pushing back the final report of the year until Dec. 7. Rain in the Delta and in the southern and eastern Midwest this week may continue to slow harvest, but favorable conditions should continue across the western Midwest, according to private weather firm DTN Meteorlogix.

Corn continues to feel some hedge pressure as producers wrap up the latter stages of harvest, an analyst said.

In other news, deliveries against the December corn contract Tuesday were considered heavy at 1,103 contracts, traders said. Deliveries on first notice day Monday were only 3 contracts.