October 15, 2008

 

CBOT Corn Outlook on Wednesday: Down 1-3 cents on outside markets

 

 

Chicago Board of Trade corn futures are expected to open with a small drop Wednesday, locked in sympathetic movement with equities and crude oil, analysts and traders said.

 

Corn is called 1-to-3 cents lower, as U.S. stocks slip, crude oil slides and the U.S. dollar strengthens.

 

In overnight trading, December corn lost 2 1/2 cents to US$4.08 3/4 per bushel and March corn dropped 2 1/2 cents to US$4.26 1/2.

 

"Corn could open lower, after the failure of Tuesday's rally attempt," said Bryce Knorr, Farm Futures Senior Editor. "Stocks still seem set for a weaker start, which could keep pressure on grains."

 

"Volume remains very sluggish in the corn market, with fewer corn contracts trading than soybeans Tuesday, but a little light buying was seen," Knorr said. "Increasing open interest brought on by fund buying could help stabilize the market, but first, futures will have to absorb harvest hedging pressure. With just 21% of the crop cut nationwide according to USDA, the bulk of that pressure still lies ahead."

 

As of Oct. 12, the USDA said 21% of the U.S. corn crop was harvested, up from 14% last week and below the five-year average of 41%. Last year, 50% of the crop had been harvested.

 

Analysts had predicted harvest progress at 22% to 30%.

 

"All commodities known to man are bearishly inclined," said 'The Gartman Letter' author Dennis Gartman. "Commodity prices have fallen modestly as the dollar has risen modestly, and the relationship between the dollar and commodity prices seems as solidly cemented now as it has ever been. As goes the dollar, so shall not go the collective commodity market."

 

Market bears will be gunning to finish the day's trade below the week's low of US$3.98 1/4 with first support is seen at US$4.07 and then US$4, a technical analyst said.

 

"Tepid short covering in a bear market was featured again. Prices are still in a 14-week-old downtrend on the daily bar chart," the analyst said.

 

Bulls will be trying to close above the US$4.42 1/2 resistance level, but must pass Tuesday's high of US$4.28 1/2 to get there, the analyst said.

 

DTN Meteorlogix forecast calls for light showers of less than half an inch in the western corn belt Wednesday and continuing in a scattered patter as they move east.

 

Mostly dry conditions are expected on Friday and Saturday with the exception of a few light showers to the north on Sunday, the private weather forecasting firm said.

 

Despite some rain-related harvest delays, temperatures shouldn't dip below 38 degrees Fahrenheit and should be favorable for harvest, Meteorlogix said.
   

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