December 30, 2009

 

CBOT Corn Outlook on Wednesday: Down 1-2 cents on overnight losses, stronger dollar

 

 

Chicago Board of Trade corn futures are expected to open slightly weaker Wednesday amid pressure from a stronger dollar, but two-sided trade is expected.

 

Corn is called 1 to 2 cents lower. In overnight trade, March corn was down 1 3/4 cents to US$4.15 1/4 per bushel and May corn was down 2 cents to US$4.25.

 

With little news and light-volume trade expected, analysts say that price action could be unpredictable, although corn has so far traded in a very tight range during the slow holiday season. It traded within a two-cent range overnight.

 

A stronger dollar could keep the market under pressure Wednesday, analysts said.

 

The market is seen gaining upward technical momentum. Speculation about index re-balancing continues to underpin the market. Whether it happens, and to what extent, could determine corn's direction to start the New Year, analysts say.

 

Fundamentally there is little fresh news for the market, although corn has received underlying support recently from concerns about the harsh winter weather and unharvested corn.

 

"The bears continue to believe there is plenty of corn around without a lot of demand to help offset the big stocks," said Mark Gold, managing partner for Top Third Ag Marketing. "The bulls continue to believe there is 500 million bushels of corn left in the fields."

 

Traders note that while export sales have been seen a strong rebound lately, actual shipments have yet to follow suit.

 

If March corn extends this week's rally, the reaction high crossing at US$4.24 1/2 is the next upside target, a technical analyst said. Closes above US$4.24 1/2 or below US$3.77 1/2 are needed to confirm a trading range breakout and point the direction of the next trending move, he added.

 

First resistance is seen at US$4.18 1/2. Second resistance is the reaction high crossing at US$4.21. First support is Monday's gap crossing at US$4.08 3/4. Second support is the 10-day moving average crossing at US$4.05 3/4.

 

Gold, with Top Third, added that "a close over US$4.50 in December 2010 corn would look tremendous on the charts." That contract was at US$4.43 in overnight trade.