February 11, 2010

 

CBOT Corn Outlook on Thursday: Up 1-2 cents on mild outside market support

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Thursday amid slightly supportive outside markets and firm cash market prices, analysts said.

 

Corn is called 1 to 2 cents higher. In overnight trade, March corn was up 2 cents to US$3.63 3/4 per bushel and May corn was up 1 3/4 cents to US$3.75.

 

The market, which had been in retreat since a bearish mid-January government crop report, has already gained 10 1/4 cents in the March contract this week. While traders say there's little to be bullish about in the market, some say the recent action bolsters the notion that the market's recent low below US$3.50 will hold.

 

Strengthening basis, or the difference between cash and futures prices, has been supportive, analysts said. The cash prices have been firm due to the harsh winter weather this week that has slowed grain transportation, and because of farmer's reluctance to sell given the recent break in prices.

 

Farm Futures senior editor Bryce Knorr adds in a commentary that while Wednesday's rally "was attributed to short covering, open interest belies that notion, gaining almost 6,500 lots."

 

Outside markets could provide some additional support, as long as the dollar remains weaker and crude oil is higher when corn opens, a trader said.

 

The market's upside potential is seen as limited, however. Large U.S. supplies and expectations of a big South American harvest are bearish factors.

 

Top Third Ag Marketing analyst Peter C. McKeegan added in a commentary that "there is still enough un-priced corn around that any meaningful rally will probably be met by heavy producer selling."

 

While traders note that the outlook for ethanol demand is strong, export sales have been unremarkable.

 

The U.S. Department of Agriculture said Wednesday it will not release its weekly export sales data Thursday because of the snowstorm that has closed the U.S. federal government this week.

 

USDA said the data will be released Friday.

 

The next downside price objective for the bears is to push and close March prices below solid technical support at last week's low of US$3.47 1/2 a bushel, a technical analyst said. The next upside price objective is to push prices above solid technical resistance at last week's high of US$3.68 1/4 a bushel.

 

First resistance for March corn is seen at Wednesday's high of US$3.65 1/2 and then at US$3.68 1/4. First support is seen at US$3.59 and then at Wednesday's low of US$3.55 1/4.