January 2, 2009

 

CBOT Corn Outlook on Friday: Down 3-5 cents on outside markets; weak exports

 

 

Chicago Board of Trade corn futures are expected to open lower Friday on pressure from outside markets and weak export sales, analysts said.

 

Corn is called 3 to 5 cents lower. There was no overnight trading because of the New Year's holiday. The market has posted strong gains through the holiday season, including on Wednesday, but analysts say the action has come in light volume, and that the trade is looking ahead to next week when the market will start returning to normal.

 

Profit-taking is expected following Wednesday's gains, and the climb might also prompt more aggressive farmer selling, analysts said.

 

"I think that any rally that occurred on (Wednesday) might get tempered today," said Jason Roose, analyst for U.S. Commodities in Des Moines.

 

Outside markets are also bearish, analysts said, with weaker crude oil and a stronger U.S. dollar pointing corn lower.

 

Weak export sales will also pressure the market, analysts said. The U.S. Department of Agriculture reported sales of 269,900 metric tonnes for the week ended Dec. 25, down from 551,400 metric tonnes the previous week. Analysts expected between 250,000 and 450,000 metric tonnes.

 

Prudential-Bache senior grains analyst Shawn McCambridge said Wednesday's strong close was based on a need to improve the year-end balance sheet, and not related to fundamental support.

 

"I don't think anyone thinks recent gains are indicative of a long-term change in price outlook," McCambridge said.

 

The market continues to monitor weather in South America, but recent rains have improved the crop outlook there, eroding support for the market, an analyst said.

 

Trade is expected to be light Friday, following the New Year's Day holiday. But activity should begin returning to normal Monday, analysts said.

 

The next upside objectives for the March contract are at US$4.33 1/2 and then US$4.38 1/2, a technical analyst said, while on the downside, a close below the 20-day moving average crossing at US$3.71 1/2 would likely confirm that a short-term top has been posted.

 

First resistance is Monday's high at US$4.21, and then at US$4.33, the technical analyst said. First support is Tuesday's low crossing at US$3.86, and then at US$3.71 1/2.