February 13, 2009

Chicago Board of Trade corn futures are expected to open slightly lower Friday amid pessimism about the world economy and positioning ahead of the long three-day weekend.

 

Corn is called 1 to 2 cents lower. In overnight trade, March corn was down 1 1/4 cents to US$3.65 per bushel, May corn was down 1 cent to US$3.75 and July corn was down 1/2 cent to US$3.85.

 

The market has little fresh bullish news and much uncertainty headed into the extended weekend, traders said. The market will be closed Monday because of Presidents Day.

 

News that Argentina farmers postponed plans Thursday to go on strike helped the market break overnight, erasing modest gains, and should weigh early in Friday's trade, traders said. Farm leaders had suggested they would go on strike and price sales of grains and other products for up to five days next week.

 

That situation could change over the course of the weekend, as could the weather in the drought-stricken country.

 

"I don't know if anyone's going to roll the dice heading into the weekend," a trader said.

 

An ongoing gloom about the economy is also weighing, traders said.

 

In export news, private exporters have reported to the U.S. Department of Agriculture export sales of 116,000 metric tonnes of corn for delivery to South Korea so far during the 2008/2009 marketing year, the U.S. Department of Agriculture said Friday.

 

Export demand has rebounded recently, with strong sales highlighted by Thursday's weekly report of more than 1.5 million metric tonnes sold, the fourth consecutive week of sales above 1 million metric tonnes.

 

The market had a poor close technically on Thursday, a trader said. The March contract is below all of its major moving averages.

 

Shawn Hackett of Hackett Financial Advisors said in a newsletter that he expects the strong U.S. sales to continue, buoyed in part by problems with the Argentina crop. Still, he recommends a "wait and see approach" with corn.

 

"As fundamentally bullish as I am in the corn market for 2009, I see no evidence, from a Money Flow perspective, that the timing is right to get aggressive buying into the corn market at this time," Hackett said.

 

A five-week-old downtrend remains in place on the daily bar chart, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at last week's low of US$3.55 3/4 a bushel. The next upside price objective is to push and close prices above solid technical resistance at this week's high of US$3.83.

 

First resistance for March corn is seen at US$3.72 1/2 and then at Thursday's high of US$3.77 3/4. First support is seen at Thursday's low of US$3.66 and then at US$3.60.