November 18, 2009

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on soy, weak dollar, slow harvest

 

 

Chicago Board of Trade corn futures are expected to open higher Wednesday following overnight gains as bulls try to keep the market above US$4.

 

Corn is called 2 to 4 cents higher. In overnight trade, December corn was up 3 cents to US$4.05 per bushel and March corn was up 3 cents to US$4.20 1/2.

 

The market is getting solid support from the soybean market, which surged Tuesday and again in overnight trade. Soybeans gains Tuesday came as corn struggled around unchanged, with selling of corn and buying of soybeans noted.

 

Ag Resource Co. says in a morning commentary that while U.S. soybean producers are in the "most enviable of positions" as the main source of soybeans, corn's recent strength has put it at a competitive disadvantage globally.

 

The market could get support Wednesday from a weaker dollar, which helped prices overnight, as well as a wetter weather pattern that has returned to the U.S. corn belt after a couple relatively dry weeks.

 

Forecasts call for showers through Thursday in the eastern corn belt. Rain and snow is expected to return early next week, continuing to stall a harvest that was only 54% complete as of Sunday.

 

With options expiration on Friday, trading of US$4 December calls has been "brisk," Farm Futures noted in a morning commentary, adding that were more than 26,000 at-the-money calls still open.

 

The market is seen by some as technically overbought, and farmer selling could also limit the upside.

 

"Good farmer movement has been noted on this rally with the producer showing a willingness to sell corn as its storability might be in question," Country Hedging analyst Kent Beadle said in a morning commentary.

 

The wet weather this fall has led to high moisture content and quality concerns about the crop.

 

The bulls' next upside price objective is to push and close prices above solid technical resistance at the October high of US$4.24 1/2 a bushel. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.79 a bushel.

 

First resistance for March corn is seen at Tuesday's high of US$4.19 1/2 and then at US$4.24 1/2. First support is seen at Tuesday's low of US$4.12 1/4 and then at US$4.10.