July 9, 2008
CBOT Corn Outlook on Wednesday: Down 7-9 cents as liquidation continues
Chicago Board of Trade corn futures are expected to open 7 to 9 cents lower Wednesday in a continuation of this week's fund liquidation.
In overnight trading, July corn was down 7 1/2 cents to US$6.85 1/4 per bushel, September corn was down 9 1/2 cents to US$6.95 and December corn was down 9 1/2 cents to US$7.13.
Bearish weather and an improving crop outlook, along with outside market weakness, have fueled losses Monday and Tuesday. Funds sold 15,000 contracts Tuesday.
December corn has dropped from a close last week at US$7.77.
"I think the real risk right now is broad-based fund liquidation of commodities as a whole," said Arlan Suderman, analyst for Farm Futures. "Where will that end?"
Corn could start to find more support today, analysts said, from stronger crude oil and a weaker dollar. News of an Iranian long-range missile test has pushed crude oil higher this morning.
Still, analysts say the market could test the US$7 barrier for December corn, which is an important technical point.
"We've got to hold US$7 on December corn, or we'll trigger more sell stops," Suderman said.
Buying from end-users helped the market rebound from steep losses Tuesday, analysts said. But Suderman said "end users are plenty happy to step aside if we do break support and let it go lower."
Analysts add that this week's slide could slow as traders begin to consolidate ahead of Friday's supply and demand report.
Weather remains bearish, traders said, with moderate rain and a lack of excessive heat helping the crop rebound from a wet spring and June flooding.
The DTN Meteorlogix forecast calls for showers and thunderstorms in the eastern U.S. corn belt Wednesday, with totals between 0.20 and 1.00 inches. After that the corn belt will be mostly dry, with some scattered showers, through Sunday.
The next upside price objective is to push December prices above solid technical resistance at US$7.47, which would fill on the upside Tuesday's downside price gap, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid support at today's low of US$7.02.
First resistance for December corn is seen at Tuesday's high of US$7.32 1/4 and then at US$7.38, the technical analyst said. First support is seen at US$7.02 and then at US$7.00.