January 9, 2009

 

CBOT Corn Outlook on Friday: Up 4-6 cents on soybeans, Argentina weather

 

 

Strong support from soybeans and dry South American weather is expected to lift Chicago Board of Trade corn futures on Friday's open, analysts said.

 

Corn is called 4 to 6 cents higher. In overnight trading, March corn was down 6 cents to US$4.12 3/4 per bushel, May corn was down 5 cents to US$4.22 1/4 and July corn was down 5 1/2 cents to US$4.33.

 

Drier weather forecasts for Argentina are supportive to both markets, analysts said. DTN Meteorlogix has taken rain out of the forecast in Argentina for early next week, with increasing risk for hot weather. The crop is entering a critical period, analysts say.

 

Hot, dry weather is also expected Friday and Saturday in key areas of Brazil, and potential rainfall later in the weekend or next week "will be needed to prevent significant stress from occurring on these crops," according to the forecast.

 

Soybeans were sharply higher overnight on the supportive weather, with speculative buying boosting prices, analysts said. The gains spilled over into corn.

 

The trade is looking ahead to Monday's production, quarterly grain stocks and supply and demand reports from the U.S. Department of Agriculture, although the trade does not expect drastic alterations.

 

Analysts project on average the 2008-09 corn crop will be pegged at 11.982 billion bushels, down from the USDA's November estimate of 12.020 billion, thanks to a late harvested crop that in some cases remains out in the field.

 

But weak demand is expected to prompt an increase in ending stocks projections, to 1.489 billion bushels, up from the government's December estimate of 1.474 billion.

 

Corn's rally of more than US$1 in the past month has kept ethanol and export demand low, although Taiwan bought 60,000 metric tonnes of U.S. corn Friday.

 

Corn's ability to hold above US$4 Thursday was a bullish signal, a trader said. Still the market is considered overbought by many, and Fortis said corn is more likely to have a correction that wheat or soybeans.

 

The next downside price objective is to push and close March prices below major psychological support at US$4.00 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at this week's high of US$4.29.

 

First resistance for March corn is seen at US$4.10 and then at US$4.15, the technical analyst said. First support is seen at Thursday's low of US$4.05 3/4 and then at US$4.00.