January 30, 2009

 

CBOT Corn Outlook on Friday: Down 2-3 cents on weak demand amid lack of news

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Friday following overnight losses, as the market drifts lower amid a lack of fresh fundamental news.

 

Corn is called 2 to 3 cents lower. In overnight trading, March corn was down 3 cents to US$3.78 3/4 per bushel, May corn is down 2 3/4 cents to US$3.90 1/4 and July corn is down 3 cents to US$4.00 3/4.

 

With a lack of fresh supportive news, the market's ongoing poor demand will pressure prices, a trader said. Although the U.S. Department of Agriculture reported strong weekly net export sales exceeding 1 million metric tonnes for the second consecutive week on Thursday, analysts note that sales for the marketing year are still well behind last year's pace.

 

Analysts said higher South American corn prices have contributed to the recent bounce in U.S. export sales.

 

"Overall demand for the crop year remains weak, and whether any sizeable ground can be made up over the remaining seven months (of the marketing year) will most likely be determined by the competitiveness of the U.S. over the balance of the year with South American new crop values," Benson Quinn Commodities analyst Jon Michaelscheck said in a market commentary.

 

South American weather remains a key focus of the market, but there are few new developments in the forecast, traders said. Scattered showers and thunderstorms are expected in drought-stricken Argentina Monday and Tuesday, according to DTN Meteorlogix.

 

"I'm not sure anyone's going to trade the weather too aggressively until they see how much rain falls," a trader said.

 

Some analysts say significant damage has already been done to the corn crop and can not be reversed. A reduction in the size of the corn crop could lead to more U.S. export opportunities, some analysts say, although others think sales will continue to lag because of competition from feed wheat.

 

In other news, the U.S. Department of Agriculture announced Friday private export sales of 213,360 metric tonnes of U.S. corn for delivery to Japan in the 2008-09 marketing year. The corn marketing year began Sept. 1.

 

The market remains caught between major moving averages. It is above the 50-day moving average at US$3.79 1/2, but below the 20-day moving average at US$3.92 1/4.

 

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 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 this week's low of US$3.72 1/2.