January 22, 2010

 

CBOT Corn Outlook on Friday: Flat-down 2 cents; export sales limit losses

 

 

Chicago Board of Trade corn futures are poised to open mixed to slightly lower Friday following overnight losses as outside markets like equities weigh on prices.

 

Corn is called steady to 2 cents lower. In overnight trade, March corn was down 4 1/4 cents, or 1.1%, to US$3.67 3/4 per bushel and May corn was down 4 1/2 cents to US$3.78 1/4.

 

Weakness in equities, prompted in part by President Obama's recent statements on bank reform, will loom over commodities on Friday, traders said.

 

"The stock market is weighing on everything," a floor trader said.

 

But the market got an unexpected boost Friday from very strong weekly export sales.

 

The U.S. Department of Agriculture on Friday reported weekly net sales of 1.61 million metric tonnes, blowing away trade expectations of between 300,000 to 900,000 metric tonnes.

 

The biggest increase was for unknown destinations (408,600 metric tonnes). Countries with increases of 150,000 metric tonnes or more included Japan, South Korea, Taiwan and Egypt.

 

The sales confirmed speculation that the recent sharp break in prices following bearish USDA crop estimates last week would lure some buyers back into the export market. A couple of analysts said prices could open higher Friday thanks to the export sales.

 

"It's going to be kind of a battle, with some of these mixed signals on these outside markets and still nothing fundamentally positive other than the short-term (export sales)," said Don Roose, president of U.S. Commodities in Des Moines, Iowa.

 

He said a key question is whether the jump in sales is a one-week event or the start of a new trend.

 

While equities and crude oil are expected to hurt prices, the dollar is down, which is usually supportive to commodity prices.

 

Despite modest gains Thursday, that rally merely ended a seven-session slide and, technically, the outlook is still bearish.

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.50 a bushel, a technical analyst said. The 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 Thursday's high of US$3.72 and then at this week's high of US$3.75 1/4, the technical analyst said. First support is seen at US$3.68 and then at Thursday's low of US$3.64.