January 21, 2010

 

CBOT Corn Outlook on Thursday: Flat open after several days of losses

 

 

Chicago Board of Trade corn futures are expected to open flat Thursday morning as the market tries to stabilize after several days of losses.

 

In overnight trade, March corn was flat at US$3.68 per bushel and May corn was down 1/4 cent to US$3.78 1/2.

 

The market has fallen seven straight days following bearish supply estimates released by the U.S. Department of Agriculture last week. But the market trimmed early losses Wednesday and closed only slightly lower, due in part to ideas that the market was oversold, traders said.

 

With little or no pressure from the outside markets--including wheat, soybeans and the dollar--that have weighed on corn the past couple days, the market could hold firm Thursday, traders said.

 

"A return to profitability in the hog crush and continued profitability in the ethanol sector appear to have helped stabilize corn futures for the time being," Country Hedging analyst Kurt Legred said in a morning commentary.

 

Traders are watching the export market for signs that the recent break in prices is stimulating more demand. Analysts say that Taiwan is tendering for 40,000 to 60,000 metric tonnes of corn, from either the U.S. or South America.

 

Weekly export sales, usually released Thursday, are delayed until Friday because of the U.S. government holiday on Monday.

 

Traders add that given the drop of more than 50 cents recently, farmers are refusing to sell, and will try to wait until prices rebound.

 

But traders say that fundamentally there is little news to rally the market. In addition to the large U.S. crop, weather in South America remains very favorable to the crop, and U.S. corn acres for 2010 are expected to be higher.

 

Technically, a bearish pennant pattern has formed on the daily bar chart recently, with Wednesday's price action possibly the beginning of a downside "breakout" from the pennant, technical analyst Jim Wyckoff said.

 

The next downside price objective for the bears is to push and close March prices below solid technical support at US$3.50 a bushel. Bulls' next upside price objective is to push prices above solid technical resistance at US$3.92 1/2 a bushel, which is the top of the recent downside price gap on the daily bar chart.

 

First resistance for March corn is seen at Wednesday's high of US$3.70 1/2 and then at this week's high of US$3.75 1/4. First support is seen at US$3.65 and then at Wednesday's low of US$3.62 1/4.