February 26, 2010

 

CBOT Corn Outlook on Friday: Up 2-3 cents on technical strength, planting

 

 

Chicago Board of Trade corn futures are expected to open higher Friday on short-covering following Thursday's losses and early jitters about the crop.

 

Corn is called 2 to 3 cents higher. In overnight trade, March corn was up 3 1/2 cents to US$3.75 3/4 per bushel and May corn was up 3 cents to US$3.86 1/4.

 

The nearby March contract is up 12 1/4 cents on the week, which according to some analysts has confirmed that a seasonal market bottom is in place. The market's relative strength was confirmed Thursday despite modest losses, a trader said, as the slide was limited even in the face of bearish outside markets.

 

Underpinning the market has been emerging concerns about the 2010 crop, even though planting won't start for at least a month in most areas. The large snowpack over the Midwest could cause flooding when it melts, meteorologists say. Analysts also note that it could take a while for fields to dry out this spring.

 

A floor trader acknowledged that it is early to be worried about spring planting, but that the issue has nonetheless provided support this week.

 

Deliveries were higher than expected Thursday, with 2,027 deliveries reported against the March futures contract on first notice day. Most traders and analysts were expecting under 1,000 deliveries.

 

The market is not getting much support from export demand, which has been lackluster recently, although analysts said that South Korea has bought 110,000 metric tonnnes of corn, with the first cargo from the U.S. and the second cargo optional origin.

 

Friday is the last day of the trading month, which could limit the upside potential, a couple analysts said, as traders take profits.

 

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

 

First resistance for May corn is seen at US$3.85 and then at this week's high of US$3.87 3/4 and then at US$3.90, the technical analyst said. First support is seen at Thursday's low of US$3.80 and then at US$3.78.