January 16, 2009

 

CBOT Corn Outlook on Friday: Higher on outside support, profit-taking

 

 

Chicago Board of Trade corn futures are expected to open 7 to 9 cents higher Friday as supportive outside markets encourage profit-taking after sharp losses this week.

 

In overnight trading, March corn was up 8 3/4 cents to US$3.74 per bushel, May corn was up 8 3/4 cents to US$3.85 and July corn was up 9 cents to US$3.95 1/2.

 

Sentiment that the market is oversold as well as the unwinding of the corn-soybean spread should give the market support, analysts said. Soybeans rallied Thursday and have limited corn's losses this week, analysts said.

 

Dry weather in South America, particularly Argentina, continues to stoke concerns about crops there, helping soybeans rally. But corn has failed to rally due to poor demand and this week's projected 1.790 billion bushel carryout.

 

Corn's weak demand was reaffirmed Thursday, with a marketing year low in weekly export sales reported.

 

Prices dropped 45 1/2 cents during the first four days of the week, and analysts say there is little reason for a strong rally.

 

"I think the overnight (gain) was a little stronger than it should have been," an analyst said.

 

But traders and analysts also say corn's recent drop should cause an uptick in export demand, and should also improve the outlook for ethanol producers.

 

Volume in the corn market has been anemic this week, noted Bryce Knorr, senior editor of Farm Futures. There were 127,122 corn contracts traded on Thursday, compared to 207,352 for soybeans.

 

"Still, corn has shown some resilience, helped along by the rally in soybeans and dry weather that's trimming corn production in Argentina," Knorr wrote in a morning commentary. "Today, a weaker dollar is helping give prices a boost."

 

Although trading was quieter Thursday, the pause in price action, following Monday's limit down losses, is not bullish, a technical analyst said, as near-term chart damage has been inflicted.

 

The next downside price objective is to push and close March prices below solid technical support at US$3.50 a bushel, the technical analyst said. The next upside price objective is to push and close prices above major psychological resistance at US$4.00.