January 28, 2010

 

CBOT Corn Outlook on Thursday: Flat; oversold, but lacks rally catalyst

 

 

Chicago Board of Trade corn futures are expected to open flat Thursday following overnight trade amid oversold conditions and weak fundamentals.

 

In overnight trade, March corn was up 1/4 cent to US$3.58 1/2 per bushel and May corn was down 1/4 cent to US$3.69.

 

The market is oversold, traders said, which is limiting the downside. But with a huge 2009 U.S. crop, an expected increase in 2010 acreage and signs of a very strong South American crop, there is little fundamental reason to push the market higher, traders said.

 

Traders said that the reluctance of farmers to sell given the fact that prices have fallen almost 70 cents this month should also help keep a floor under the market, at least in the short term. But Mike Zuzolo, president of Global Commodity Analytics and Consulting, said that some farmers might need to sell during the next few days because of end-of-month, cash-flow reasons.

 

Views on export sales were mixed. Export sales were well above the prior week's total, but a trader said they were still relatively strong. The U.S. Department of Agriculture reported weekly net sales of 902,300 metric tonnes. Analysts were expecting between 700,000 and 1.3 million metric tonnes.

 

With supplies large and the market slipping, bulls are hoping lower prices will stimulate demand.

 

March corn closed lower Wednesday, nearer the session low, and hit another fresh 3 1/2-month low, a technical analyst said.

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.50 a bushel, the technical analyst said. Bulls' next upside price objective is to push prices above solid technical resistance at US$3.73 a bushel.

 

First resistance for March corn is seen at Wednesday's high of US$3.63 1/2 and then at this week's high of US$3.69 1/4. First support is seen at US$3.55 and then at US$3.50.

 

In other news, Argentina's corn and wheat exports got a surprising boost in December after months of lackluster shipments.

 

The country exported 662,970 metric tonnes of corn in December, up from 248,081 tonnes shipped a year earlier, according to the latest data from the animal health and sanitation service, Senasa.