January 29, 2009

 

CBOT Corn Outlook on Thursday: Lower on overnight, but exports support

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday following overnight losses, although the market is expected to get a boost from a second straight week of strong export sales.

 

Corn is called 2 to 4 cents lower. In overnight trading, March corn was down 6 1/4 cents to US$3.78 1/4, May corn was down 6 1/4 cents to US$3.89 1/4 and July corn was down 6 1/4 cents to US$4.

 

Strong export sales should limit corn's losses, analysts said. Weekly net export sales for the week ended Jan. 22 were reported at 1.108 million metric tonnes, the second week in a row that sales topped 1 million. Top buyers were Japan, Mexico, Egypt and Venezuela.

 

Analysts were expecting sales of anywhere between 350,000 and 900,000 metric tonnes.

 

Country Hedging called the sales "pretty good," but said total sales for the marketing year are still running at about half of last year's pace.

 

"With crude pushing US$40 and South America weather that's not very bullish, I still think we open a little weaker," a trader said. He noted that the weakness in crude oil could be mitigated to some extent by strength in the dollar.

 

The market continues to keep a close eye on weather in South America. Traders and analysts said morning forecasts were neither bullish nor bearish.

 

"Enough Argentine rain has fallen to date to keep the drought bulls at bay, but no one will sell the market too aggressively until a soaking rain falls," Ag Resource said in a market commentary.

 

Despite the stronger export sales, feed and ethanol demand remains weak, a trader said. He added that some light domestic end-user buying is supportive.

 

The next downside price objective is to push and close March prices below solid technical support at the January low of US$3.58 3/4 a bushel, a technical analyst said. The next upside price objective is to push and close prices above major psychological resistance at US$4.00.

 

First resistance for March corn is seen at Wednesday's high of US$3.86 and then at US$3.90, the technical analyst said. First support is seen at last week's low of US$3.76 1/4 and then at Wednesday's low of US$3.72 1/2.