November 11, 2008
CBOT Corn Outlook on Tuesday: Down 5-7 cents as economic gloom pressures
Lower crude oil and continuing concerns about the global economy are expected to push Chicago Board of Trade corn futures lower at Tuesday's open, traders said.
Corn is called 5 cents to 7 cents lower. In overnight trading, December corn ended down 5 1/2 cents to US$3.78 per bushel and March corn ended down 6 cents to US$3.95 1/2.
Outside market weakness will set the tone for the market, traders said. Most commodities fell overnight with lower crude oil weighing on corn and grains in general, a trader said.
"With Monday's USDA report out of the way there's little fresh news for corn to trade, leaving prices at the mercy of the prevailing mood, which remains negative," Farm Futures said in a morning commentary.
Bad news from companies ranging from Circuit City Stores Inc. (CCTQY) to DHL Worldwide Express Inc. to American Express Co. (AXP) has added to the gloom, a trader said. Optimism due to China's plan for an economic stimulus package has fizzled, he added.
Many traders saw the USDA report, which cut corn production, as slightly supportive. But the report also cut projected export demand, and traders said the report would not have a long-term impact on the market.
Demand remains a weight on corn, with analysts noting low export inspection numbers released Monday. An analyst said the continued weakness in export sales is all the more disappointing because freight rates are extremely low.
Weather is a supportive factor, traders said, with rain and snow moving across the U.S. Midwest delaying a harvest that is already behind schedule. The U.S. Department of Agriculture on Monday reported the harvest at 71% complete, behind the average of 88%.
"A more favorable period for crop harvests begins late this week or during this weekend but it is uncertain how long this may last," DTN Meteorlogix said in a forecast.
A technical analyst said there could still be a retest of the October low of US$3.64, which is the next downside price objective. The next upside price objective is to push and close December prices above psychological resistance at US$4.
First resistance for December corn is seen at Monday's high of US$3.90 and then at US$4, the technical analyst said. First support is seen at US$3.75 and then at Monday's low of US$3.72 3/4.
In international news, China exported 30,000 tonnes of corn in October, according to initial data issued by the General Administration of Customs Tuesday, down sharply from 210,000 tonnes a year earlier.
In the first ten months, China exported 210,000 tonnes of corn, down 95.5%, it said.