December 16, 2009

 

CBOT Corn Outlook on Wednesday: Up 1-3 cents on dollar; market rangebound

 

 

Chicago Board of Trade corn futures are expected to be firm at Wednesday's open thanks to weakness in the dollar.

 

Corn is called 1 to 3 cents higher. In overnight trade, March corn was up 2 cents to US$4.09 1/2 per bushel and May corn was up 2 cents to US$4.20 1/4.

 

In addition to the weaker dollar, the market could also continue to get support from fund positioning heading into the new year, analysts said.

 

"Traders are talking up the fact that this is the last full week of trade ahead of the New Year and that most trade houses will attempt to get their positions in line now, rather than wait until the last two weeks when volume is expected to be much lighter than what we have seen recently," Benson Quinn Commodities analyst Jon Michalscheck said.

 

The fund reallocation is being seen more in corn than in soybeans, analysts said, with expectations that the funds will add 60,000 corn contracts.

 

AgResource said it suspects that some of the index fund buying has already been completed, and "if crude oil prices continue to decline into year end, this aforementioned grain demand will be far smaller."

 

The market's upside is seen as limited, with most traders and analysts saying corn is rangebound. Weak demand is capping the market, traders said, as higher prices cause demand to dry up.

 

"We're just very uncompetitive as we move up," an analyst said.

 

However, analysts also note there have been signs of life in the export market recently.

 

Concerns about the crop are also supportive. Eight percent of the crop remained unharvested as of Sunday, and some analysts say much of that corn could remain in the fields until Spring, and will be vulnerable to damage until then.

 

The next upside price objective is to push and close prices above strong technical resistance at the November high of US$4.25 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 US$3.90 a bushel.

 

First resistance for March corn is seen at this week's high of US$4.10 and then at US$4.15, the technical analyst said. First support is seen at Tuesday's low of US$4.05 and then at US$4.00.