February 25, 2010

CBOT Corn Outlook on Thursday: Seen retreating amid outside pressure

Chicago Board of Trade corn futures are expected to start 2 to 3 cents per bushel lower Thursday as the markets pull back from gains amid bearish signals from outside markets.

In overnight electronic trading, nearby CBOT March corn dropped 1 1/2 cents, or 0.4%, to US$3.73 3/4 a bushel. May corn stumbled 1 3/4, or 0.5%, cents to US$3.84 1/2.

The market backpedaled a bit after rising Wednesday on fund buying, supportive outside markets and some worries that wetness will delay U.S. spring plantings. Wednesday's gains were "a strong technical clue that a market low is in place and corn prices can trend sideways to higher in the near term," a technical analyst said.

Still, profit-taking weighed on prices overnight, and there could be follow-through selling early Wednesday, a trader said. Strength in the U.S. dollar and losses in crude oil and precious metals set a negative tone for the grains, he said.

The next downside price objective for the bears is to push and close May corn below solid technical support at this week's low of US$3.71 1/4, the technical analyst said. Bulls' next upside price objective is to push and close prices above major psychological resistance at US$4.00, he said.

First resistance for May corn is seen at this week's high of US$3.87 3/4 and then at US$3.90. First support is seen at US$3.84 and then at US$3.80, he said.

There continues to be chatter about the potential for planting delays because heavy snow raises the possibility of flooding, traders said. However, there is still "a long time until planting season and a burst of warm weather will quickly take care of the snow," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage

Weekly U.S. corn export sales were weaker than expected at 451,300 tonnes. Analysts had expected sales of 500,000 to 900,000 tonnes. Net sales of 401,300 tonnes for delivery in 2009-10 were down 59% from the previous week and 55% from the prior four-week average, according to the U.S. Department of Agriculture.

Traders are looking ahead to Friday, which is first notice day for March futures contracts, and will likely do some positioning ahead of that, a broker said. First notice day is the first day that notices of intention to deliver actual commodities against futures-market positions can be received. Market participants roll their positions forward because they do not want to take delivery.