January 29, 2010
CBOT Corn Outlook on Friday: Down 1-2 cents; lack of supportive news
Chicago Board of Trade corn futures are expected to open slightly lower Friday amid technical pressure and a lack of fundamental support.
Corn is called 1 to 2 cents lower. In overnight trade, March corn was down 1 1/2 cents to US$3.60 1/4 per bushel and May corn was down 1 1/2 cents to US$3.71 1/4.
Seasonal trends continue to weigh on the market, and there is little reason to rally corn, traders said. The market posted modest gains Thursday, but that was mostly dismissed as a short-covering bounce in a market that was oversold. The March contract had been hovering around US$4.25 until the U.S. Department of Agriculture's bearish crop report Jan. 12.
Crops in South America are expected to be large, and rains in the forecast for Argentina will limit concerns about recent dryness there, analysts add.
Outside markets are seen as a mixed influence following the release Friday of better-than-expected U.S. fourth quarter GDP figures. Higher crude oil is supportive, but if the dollar also climbs that will negate the support, analysts said.
The market's downside is limited by end-user buying at the lower levels, traders said.
"The good news is this is a buyers' market," said Joe Victor, vice president/marketing for Allendale. "It is creating demand."
Also, farmers have been reluctant sellers at the lower prices.
The next downside price objective for the bears is to push and close 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$3.73 a bushel.
First resistance for March corn is seen at Thursday's high of US$3.63 and then at this week's high of US$3.69 1/4. First support is seen at Thursday's low of US$3.57 3/4 and then at US$3.50.
Although one analyst noted that Thursday's climb marked an outside day on the technical chart, FuturesTechs said "it's just a mild reversal pattern and we can stay bearish here."
