September 17, 2008

 

CBOT Corn Outlook on Wednesday: Up 5-7 cents; outside markets lend support

 

 

Oversold market conditions coupled with supportive outside market influences have Chicago Board of Trade corn futures poised for a higher start to Wednesday's day session.

 

Analysts expect corn to open 5 to 7 cents higher.

 

In overnight electronic trading, December corn was 6 1/4 cents higher at US$5.38 1/2, and March corn was 6 cents higher at US$5.56 1/4.

 

The market has absorbed sharp losses in recent weeks, but without pressure from outside markets, futures are looking overdone on the downside, analysts said.

 

However, the overall theme of the market remains bearish, with today's higher tone seen more of a minor short covering bounce from recent losses, said Mike Zuzolo, analyst with Risk Management Commodities Inc.

 

"I don't think you have fixed the economic problems around the world yet, and if equity markets don't come around, corn's early advances could be short lived," Zuzolo added.

 

The absence of fresh fundamental news is expected to keep traders focused on outside market factors, and with favorable weather conditions for late maturing crops and some harvesting, price pressure remains a possibility, analysts added.

 

At 9:21 a.m. EDT crude oil futures are up US$2.37 a barrel and the U.S. dollar index is lower.

 

A technical analyst said the next upside price objective for December the corn is to push and close prices above resistance at US$5.80 3/4. The next downside price objective is to push and close prices below major psychological support at US$5.00.

 

First resistance for December corn is seen at US$5.40 and then at US$5.45. First support is seen at last week's low of US$5.31 and then at US$5.25. The DTN Meteorlogix weather forecast said dry weather for at least the next 5 to 7 days along with mostly above normal temperatures will help fields recover from recent rains and will help crops continue move towards maturity.

 

Meanwhile, corn prices in China's major producing areas were mostly stable in the week ended Wednesday, but prices were lower in some consumption regions amid sluggish demand. Trading in major producing areas was light, as farmers don't have many stocks on hand, while traders stayed on the sidelines due to uncertainty over the price outlook.