January 15, 2010

 

CBOT Corn Outlook on Friday: Seen down 2-3 cents, consolidating

 

 

Chicago Board of Trade corn futures are poised to start 2 cents to 3 cents per bushel lower Friday amid continued bearishness about a giant U.S. crop and as the market tries to consolidate ahead of the weekend.

 

In overnight electronic trading, CBOT March corn slipped 2 1/4 cents to US$3.78 3/4.

 

Consolidation and positioning are expected ahead of the three-day holiday weekend after a steep drop in prices earlier in the week. March corn as of Thursday's close was down 42 cents on the week. The market on Tuesday fell its daily, exchange-imposed limit of 30 cents after the U.S. Department of Agriculture increased its U.S. production estimate above industry expectations.

 

"Look for prices to open lower and then chop around," said Tomm Pfitzenmaier, an analyst for Summit Commodity Brokerage. "We have obviously had a sharp sell-off this week and there may be some profit-taking today. The dollar is stronger and the other outside markets are weaker, so don't expect too much help there for corn."

 

March corn on Thursday traded an inside day, which means that its highs and lows were within the previous day's range. That indicates the market is now consolidating prior to its next move, according to a note from Midwest Market Solutions.

 

There was some late buying Thursday as that market saw "what is expected to be the last" of a rebalancing process by index funds, Pfitzenmaier said. Without support from fund buying, "you have to wonder what we can look at to support corn prices," he said.

 

The USDA on Tuesday estimated total U.S. production at 13.151 billion bushels, above the average analyst estimate of 12.819 billion bushels and above the government's December estimate of 12.921 billion. Last year's crop totaled 12.101 billion bushels.

 

Technically, the corn market also is breaking down, Pfitzenmaier said. Front month corn is projected to fall into the US$3.30 to US$3.45 range, and new-crop months don't have much reason to rally either, he said. December corn rallies back up into the US$4.25 to US$4.35 area look like they should be sold, he said. December corn overnight dropped 2 3/4 cents to US$4.12 3/4.

 

Bulls' next upside price objective is to push and close March corn above major psychological resistance at US$4.00, a technical analyst said. The next downside price objective for the bears is to push and close the contract below solid technical support at US$3.50, he said.

 

First resistance for March corn is seen at Thursday's high of US$3.82 3/4 and then at US$3.85 1/4, the technical analyst said. First support is seen at Thursday's low of US$3.76 1/2 and then at the November low of US$3.72 1/2, he said.