September 24, 2008


CBOT Corn Outlook on Wednesday: Higher on outside markets, technical bounce



Chicago Board of Trade corn futures are poised to open higher Wednesday as the market continues to follow outside markets amid its own technical bounce, analysts said.


Corn is called 8 to 10 cents higher. In overnight trading, December corn was up 10 cents to US$5.70 1/4 cents per bushel and March corn was up 10 cents to US$5.88.


Without its own dominant fundamental feature, the trade will continue to watch for developments in the U.S. government's plan for a bailout of the financial sector, analysts said. Warren Buffet's infusion of US$5 billion into Goldman Sachs announced Tuesday could provide confidence in the financial markets, which could support commodities as well, analysts said. Higher crude oil Wednesday is supportive to corn, the analysts added.


Corn prices have rebounded since hitting an intraday low of US$5.24 in the December contract Sept. 18.


"We're seeing a little bit of a technical bounce taking place," said Shawn McCambridge, senior grains analyst for Prudential-Bache. But he said the upside is limited without strong outside support or fundamental news.


There is currently no strong frost threat, and if one hasn't emerged in the forecast by next week, much of the concern about the late-planted crop's vulnerability to a frost before reaching maturity will disappear, McCambridge said.


"That's exactly what a lot of these fields need, is a later frost," he said.


The DTN Meteorlogix forecast calls for warm and mostly dry weather that will continue to favor the maturing crops "for at least another 4 to 5 days." Weather may be cooler and wetter beyond that.


Traders and analysts said demand remains lackluster. Country Hedging notes in a morning outlook that "ethanol processing margins are not very stellar at the present time."


If the bailout plan is delayed and confidence continues to plunge in the financial sector, commodities will also be pressured, traders said. Concerns of a weaker world economy dampening commodity demand have weighed on the market in recent weeks, they said.


The next upside price objective is to push and close prices above resistance at US$5.80 1/4, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at last week's low of US$5.24.


First support is seen at US$5.50 and then at US$5.40.

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