January 22, 2009
CBOT Corn Outlook on Thursday: Up 1-3 cents as market relies on soy support
Chicago Board of Trade corn futures are expected to open 1 to 3 cents higher Thursday as strength in soybeans continues to prop up the market, analysts said.
In overnight trading, March corn was up 1 3/4 cents to US$3.92 per bushel, May corn was up 2 cents to US$4.03 and July corn was up 1 3/4 cents to US$4.13. The market traded both sides of unchanged during the overnight session.
Drought in Argentina and concerns about the nation's crops have supported corn and soybeans. Those fears were reaffirmed Wednesday, when the government there cut its acreage estimates for corn, wheat and soybeans, prompting a rally.
"We don't have a lot of direction, other than influence from the soybean market and the dry weather in Argentina and Brazil," said Brian Hoops, president of Midwest Market Solutions.
DTN Meteorlogix calls for dry weather conditions in Argentina for the next five days except on Sunday, when scattered showers and thunderstorms are expected.
Other than the dry South American weather, "you're looking at bearish fundamentals for corn," Hoops said.
The market's weak demand picture is limiting corn's upside potential. Some analysts say the market doesn't have enough demand to warrant prices above US$4, and that corn may have to drop to US$3.50 before customers return.
Soybeans have a stronger demand outlook, analysts said. As that market rallies, corn has keep pace to avoid losing planted acreage this year, some analysts said. However, many analysts, including Hoops, say corn does not need to "buy" acres, however, due to the large 1.790 billion bushel carryout for 2008-09 that the U.S. Department of Agriculture is projecting.
The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.58 3/4 a bushel. The next upside price objective is to push and close prices above major psychological resistance at US$4.
First resistance for March corn is seen at today's high of US$3.91 3/4 and then at US$3.95. First support is seen at US$3.80 and then at Wednesday's low of US$3.78.
