December 2, 2009

 

CBOT Corn Outlook on Wednesday: Down 1-2 cents; lack of fundamental support

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Wednesday amid a lack of supportive fundamental news and follow-through weakness.

 

Corn is called 1 cent to 2 cents lower. In overnight trade, December corn was down 1 1/4 cents to US$3.98 1/2 per bushel and March corn was down 1 1/2 cents to US$4.13.

 

The market is expected to follow up weakness from Tuesday, when the market felt pressure from the Environmental Protection Agency's decision to delay action on a request to increase the ethanol blend to 15% from 10%.

 

Outside markets, including a modestly stronger dollar and weaker crude oil, weighed in overnight trade, and corn has no strong fundamental news to prompt a rally, analysts said.

 

"Funds seem to have lost any sense of urgency in buying corn, and that may remain the case until we see a new low in the dollar," Fortis said in a morning commentary.

 

Analysts also note that farmer selling could limit the market's upside potential in the short-term.

 

Jerry Gidel, analyst with North America Risk Management Services, said that grain and soybean prices "seem to be losing their momentum" and that next week's supply and demand updater from the government "isn't likely to instill much concern about either U.S. or world supplies running out soon."

 

The U.S. Department of Agriculture will issue updated supply and demand estimates Dec. 10.

 

The market has underlying support from concerns about the unharvested crop that is still lingering in the field in some cases, but some analysts say that market is focusing more on demand now.

 

The demand outlook is considered bearish. Benson Quinn Commodities analyst Kevin R. Kjorsvik said in a market commentary that "importers are switching to lower priced South American corn and don't see a need to chase the US market higher at the current time."

 

Technically, bulls still have the near-term advantage, a technical analyst said, as prices are in an 11-week uptrend on the daily bar chart. The next upside price objective is to push and close March prices above solid technical resistance at the November high of US$4.25 a bushel. 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 a bushel, the technical analyst said.

 

First resistance for March corn is seen at Tuesday's high of US$4.21 1/4 and then at US$4.25. First support is seen at US$4.10 and then at this week's low of US$4.07 1/4.