November 12, 2008
CBOT Corn Outlook on Wednesday: Lower on outside pressure, weak demand
Chicago Board of Trade corn futures are expected to open slightly lower Wednesday following weakness overnight, as the market continues to face headwinds from outside markets.
Corn is called 2 to 4 cents lower. In overnight trading, December corn ended down 1 cent to US$3.73 1/4 per bushel, March corn ended down 3/4 cent to US$3.91 and May corn ended down 5 3/4 cents to US$3.98.
Weak demand continues to weigh on corn. But there's little fundamental news in the market at the moment, and corn will likely follow outside markets, particularly crude if it continues to drop.
"Really, there's a little bit of a news vacuum," a trader said. "I think money flows from the outsides will continue to drive it, and they're flat for a change."
Weather is providing modest underlying support, traders said. Scattered precipitation is expected to continue to hinder harvesting this week, although drier conditions are expected next week according to DTN Meteorlogix. The harvest is behind schedule, particularly in the northern U.S. Midwest.
In Tuesday's trading, December corn dipped below its October low of US$3.64, but recovered to close above that mark. Midwest Market Solutions said in its opening comment that a close below US$3.71 1/2 would be bearish.
Weak export sales are weighing on the market, analysts say. Analysts noted that Taiwan bought 55,000 metric tonnes of corn from Brazil rather than the U.S., and that China has eliminated a corn export tax scheduled to take effect in December. Corn is also facing competition from large amounts of feed-quality wheat on the market, analysts add.
In international news, corn prices in China fell slightly in the week to Wednesday as processors lowered their bid prices, while rising supply is likely to weigh on prices in the coming weeks, traders and analysts said.
French 2008-09 production is expected to rise to 15.4 million tonnes, according to forecasts issued Wednesday by L'Office National Interprofessionnel des Grandes Cultures, or ONIGC. The corn crop estimate is up 1.1 million tonnes on last month's figure and is up 7% on the previous year.