December 23, 2008
CBOT Corn Outlook on Tuesday: Up 1-3 cents amid pre-holiday consolidation
Chicago Board of Trade corn futures are expected to open slightly higher Tuesday following overnight gains, although a lack of fundamental support makes a strong rally unlikely, analysts said.
Corn is called 1 to 3 cents higher. In overnight trading, March corn was up 2 1/4 cents to US$3.84 per bushel, May corn was up 1 3/4 cents to US$3.93 3/4 and July corn was up 1 3/4 cents to US$4.04 1/4.
Analysts expect more low-volume trade, as many traders have already started their Christmas break and have set their positions. The market was lower throughout Monday's trade before rallying to close a couple cents higher, but there's little reason for the market to climb, particularly since it has already bounced about US$1 from its low earlier this month, analysts say. Demand in feed, ethanol and exports are all weak.
"Corn has very little in terms of fundamental support to sustain a rally and has continued to take its lead from the other grains as well as outside influences over the past three weeks," Benson Quinn Commodities analyst Jon Michalscheck wrote in a commentary.
Corn is also getting little direction from outside markets, with crude oil and the dollar in narrow, range-bound trading.
Traders are keeping an eye on weather in South America, although views are mixed on whether this is supportive. Some analysts say dry weather is placing the crop under stress and threatening production, while others say Argentina and Brazil have gotten enough rain to avoid any significant losses so far.
News of China's plan to purchase 20 million metric tonnes of domestic corn is also mildly supportive, analysts say.
The next downside price objective is to push and close March prices below solid technical support at last week's low of US$3.70 1/4, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$4.02 3/4.
First support for March corn is seen at Monday's low of US$3.76 1/4 and then at US$3.70. First resistance is seen at Monday's high of US$3.86 1/4 and then at US$3.90.