February 19, 2010

 

CBOT Corn Outlook on Friday: Seen down 1-2 cents on overnight, firm dollar

 

 

Gains in the U.S. dollar, follow-through selling and comfortable grain supplies are expected to pressure Chicago Board of Trade corn futures at the start of Friday's day session.

 

CBOT March corn is called to open 1 to 2 cents a bushel lower. In overnight electronic trading, CBOT March corn slipped 1/2 cent to US$3.56 3/4.

 

Commodity prices slumped after the Federal Reserve sparked a rally in the dollar by hiking the rate it charges banks for temporary loans by a quarter percentage point to 0.75%. A strong dollar is often seen as unsupportive for U.S. grains because it makes them less attractive to foreign buyers and reduces investors' appetite for risk.

 

"The Fed announcement was a surprise to the trade," said Brian Hoops, president of Midwest Market Solutions. "The U.S. dollar rallied sharply on the news while a host of other commodities like energies, grains, metals and the stock market all traded lower. The grain markets are suffering from a lack of positive fundamental news while technical trends are weakening amid fund selling."

 

In other news, weekly U.S. corn export sales of 974,600 tonnes were strong and above trade expectations of 550,000 to 850,000 tonnes. The export sales, all for delivery in 2009-10, were up 31% from the previous week but down 7% from the prior four-week average, according to the U.S. Department of Agriculture.

 

The USDA, at its annual Agricultural Outlook Forum, estimated U.S. 2010-11 corn production at 13.16 billion bushels, with planted area estimated at 89 million acres. The production estimate is virtually unchanged from last year, but acreage is seen up 3%.

 

The estimates were not shocking and could still change because the crop won't be planted until spring, a trader said. A broker said he was recommending clients continue to sell rallies amid sentiment that corn supplies are comfortable.

 

Corn on Thursday closed lower and nearer the session low. Bears still have the overall near-term technical advantage and have "reconfirmed that notion" recently, a technical analyst said.

 

The next downside price objective for the bears is to push and close March corn below solid technical support at the February low of US$3.47 1/2, he said. The bulls' next upside price objective is to push prices above solid technical resistance at US$3.80, he said.

 

First resistance for March corn is seen at Thursday's high of US$3.61 1/2 and then at US$3.65, the technical analyst said. First support is seen at Thursday's low of US$3.55 1/2 and then at US$3.50, he said.