December 17, 2008
CBOT Corn Outlook on Wednesday: Up 3-5 cents on overnight gains, dollar
Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Wednesday morning following overnight gains, as weakness in the dollar continues to boost grains.
In overnight trade, March corn was up 5 1/2 cents to US$3.99 1/4, May corn was up 4 1/2 cents to US$4.09 3/4 and July corn climbed 5 1/4 cents to US$4.21 1/2.
Corn has shown impressive upside movement, but the market's rally could be running out of steam, some analysts said. The March contract is up from an intraday low of US$3.05 1/2 on Dec. 5.
A weaker dollar has boosted corn and many other commodities in recent days. Although the dollar continues to slide, outside markets overall are mixed, a trader said. Crude oil was lower in morning trading. Prices have climbed recently even with weak crude oil, however.
"It's all dollar, all the time," said Jerry Gidel, analyst for North America Risk Management Services. "All of a sudden, it doesn't even matter what's going on with the crude."
Traders say the market has support from South American weather, as lingering dryness in parts of Brazil and Argentina has raised concerns about the crop.
A trader said the market will likely open higher in line with the overnight gains, but that further direction will depend on outside markets. There could also be profit-taking following corn's recent gains, an analyst said.
Corn has been supported by concerns about planted acreage in 2009, but analysts add that the demand picture remains bearish.
"Despite the nice gains by corn yesterday, volume continues to be fairly light, with open interest declining again," Farm Futures said in a morning commentary. "That suggests the rally is mostly short-covering, not the result of new money moving into the market. However, a move by March above US$4.06 today could finally spark more interest."
Gidel said there could be some early buying enthusiasm, but that traders also might be cautious with prices back up around US$4.
The next downside price objective is to push and close March prices below solid technical support at Tuesday's low of US$3.70 1/4, a technical analyst said. The next upside price objective is to push and close prices above major psychological resistance at US$4.00.
First resistance for March corn is seen at US$4.00 and then at US$4.06 1/2. First support is seen at US$3.88 1/4 and then at US$3.80.