December 3, 2008
CBOT Corn Outlook on Wednesday: Down 1-2 cents; follow overnight, weak outside markets
Corn futures on the Chicago Board of Trade are seen starting Wednesday's day session lower, following the overnight price trend, with weak outside market influences expected to aid the defensive tone.
Analysts expect corn to open 1 cent to 2 cents lower.
In overnight electronic trading, December corn was 1/2 cent lower at US$3.32, and March corn was 1/4 cent lower at US$3.48.
A quiet news front is expected to keep traders focused on outside market factors, with a sluggish export pace, increased competition from feed wheat and large deliveries providing a bearish fundamental picture, analysts said.
However, traders were impressed with corn's ability to hold steady in the face of spillover weakness from soybeans Tuesday, and that may provide some optimism that downside pressure maybe becoming exhausted, analysts added.
Nevertheless, traders will keep a close eye on movement in outside markets, as global economic uncertainty remains a key driver of price direction.
In early action, outside markets are mixed, with crude oil choppy, the dollar firmer and stock index futures pointing lower.
A technical analyst said corn bears have the overall near-term technical advantage. Corn prices are still trading below a five-month-old downtrend line on the daily bar chart. The next downside price objective for March corn is to push and close prices below solid technical support at US$3.25. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$3.77 3/4.
First resistance for March corn is seen at US$3.50 and then at Tuesday's high of US$3.54. First support is seen at Tuesday's low and the contract low of US$3.45 and then at US$3.40. The DTN Meteorlogix weather forecast said rain and storms in Argentina late last week and early in the weekend greatly improves soil moisture and eased stress to crops, especially after recent very hot weather. However, it now looks to be drier again during the next week or so.
The U.S. Department of Agriculture announced Wednesday private export sales of 120,000 metric tonnes of U.S. corn for delivery to Mexico in the 2008-09 marketing year.
December corn deliveries totaled 1,971 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was December 1.
In overseas markets, China's corn prices in major producing areas were lower in the week ended Wednesday as feedmeal demand remained sluggish. Traders are treading cautiously, not buying large amounts of corn, while corn processing plants are also not building up stockpiles fearing a gloomy demand outlook, analysts said.