February 27, 2009

Chicago Board of Trade corn futures are expected to start Friday's day session lower, stumbling in step with overnight declines amid economic jitters and a lack of fresh support news, analysts said.

 

Analysts expect corn to open 3 cents to 5 cents lower.

 

In overnight electronic trading, March corn was 3 1/2 cents lower at US$3.29, and May corn was 5 cents lower at US$3.65 1/2.

 

Global economic weakness remains a bearish influence on market direction, with lower crude oil, equities and a firmer U.S. dollar serving as catalysts to keep buyers on the defensive, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

The market lacks fresh fundamental support to buoy prices, with technical pressure and a lack of any bullish input from U.S. Department of Agriculture's Outlook Forum data adding to the lower tone, a CBOT floor analyst said.

 

Otherwise, traders anticipate another choppy session, with traders eyeing movements in outside markets, as the absence of commodities market moving news fails to inspire traders to take an aggressive stance in the market, floor brokers added.

 

A technical analyst said a seven-week-old downtrend remains in place on the daily bar chart. The next downside price objective for May corn is to push and close prices below solid longer-term technical support at US$3.50 a bushel. The next upside price objective is to push and close prices above solid technical resistance at US$3.90.

 

First resistance for May corn is seen at US$3.75 and then at Thursday's high of US$3.80 1/2. First support is seen at Thursday's low of US$3.65 3/4 and then at US$3.60.

 

U.S. 2009-10 corn planted area is estimated at 86 million acres and production is seen at 12.365 billion bushels, according to the U.S. Department of Agriculture, which released its grains and oilseeds outlook Friday at its annual Agricultural Outlook Forum.

 

The USDA said corn yields this year are seen at 156.9 bushels per acre. Regarding demand, the government said ethanol production would grow to 4.1 billion bushels while exports are seen at 1.850 billion bushels. Ending stocks for 2008-09 are seen at 1.720 billion bushels.

 

March corn deliveries totaled 3,657 lots. A customer account at UBS Securities was the primary issuer of 2,104 lots, with the primary stopper was a customer account at MF Global. The last trade date assigned was February 10.

 

In other news, Argentina's two leading papers are reporting that the government is considering a complete takeover of the commercialization of grains amid tense negotiations between farmers and the government to avoid a repeat of last year's crippling farm strikes.

 

La Nacion and Clarin both said in front page articles Friday that a plan to transfer control of all purchases and exports to the agricultural trade office was under study. However, a government source denied Friday any knowledge of the plan.