September 10, 2008


CBOT Corn Outlook on Wednesday: Slightly lower as market seeks direction



Chicago Board of Trade corn futures are expected to open slightly lower Wednesday following overnight losses as the market struggles for direction and consolidates ahead of Friday's crop production report, traders said.


Corn is called steady to 2 cents lower. In overnight trading, September corn was down 2 1/2 cents to US$5.27 per bushel, December corn was down 1 1/4 cents US$5.43 1/4, and March corn was down 1 1/2 cents to US$5.62.


The market traded both sides overnight, and its direction Wednesday could depend on any fresh news and weather forecasts, analysts said.


"Futures ended the electronic-only session a little lower, but bids so far indicate potential for a slightly better open, leaving the call pretty much a jump ball," Farm Futures said in a morning commentary.


Movement in outside markets including crude and the dollar could affect corn, but those markets were seen as stable Wednesday morning.


With little other news, the market is looking ahead to this week's crop production estimates, which the U.S. Department of Agriculture will release Friday at 8:30 a.m., EDT.


Analysts surveyed by Dow Jones expect on average that the USDA will drop projected corn yield to 153.3 bushels per acre, down from 155 bushels in the August report, and cut total production to 12.152 billion bushels, down from 12.288 billion.


Traders said price action will likely be tempered leading into the report.


"Smaller guys are going to the sidelines, evening up," a trader said.


Open interest increased on yesterday's break, which Farm Futures called "a bearish sign suggesting new selling entering the market." A trader interpreted the increase as a sign that "maybe some are trying to pick a bottom ahead of the report."


The USDA's August report was seen as bearish when it was released, but the slumping market set a short-term bottom that day before rebounding, with traders saying the report had already been traded.


Weather forecasts were seen slightly bearish Wednesday, with a reduced threat of frost in the long-range forecasts. The market found support both Monday and Tuesday from mid-day forecasts that increased the potential for frost late next week.


Crops should continue to mature as temperatures stay above freezing during the next 10 days, according to DTN Meteorlogix. Rainfall at the end of this week and during the weekend should favor filling crops, especially through southern and eastern areas.


A trader said the market might have found some short-term technical stability by rebounding from Tuesday's lows. End-user buying supported the market, he said.


The next upside price objective is to push and close December prices above solid technical resistance at the July low of US$5.62 3/4. The next downside price objective is to push and close prices below solid technical support at US$5.25.


First resistance for December corn is seen at Tuesday's high of US$5.50 and then at US$5.55. First support is seen at US$5.40 and then at US$5.37.


In international news, China's corn exports in August reached 30,000 metric tonnes, down 87% from a year ago, according to the initial data issued by the General Administration of Customs Wednesday.

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