March 4, 2010

 

CBOT Corn Outlook on Thursday: Down 2-4 cents as fundamentals cap upside

 

 

Chicago Board of Trade corn is expected to open under pressure Thursday following overnight losses amid gains in the dollar and lackluster demand.

 

Corn is called 2 cents to 4 cents lower. In overnight trade, March corn was down 3 cents to US$3.72 3/4 per bushel and May corn was down 2 cents to US$3.84 3/4.

 

A slightly stronger dollar pressured the market overnight, and outside markets could weigh again in the day session, causing the market to give back some of Wednesday's gains, analysts said. Fundamentally the grains markets are not getting a strong push in either direction, although a trader notes that when the markets rally, "large global inventory puts the fire out."

 

Weekly net export sales reported Thursday totaled 833,400 metric tonnes. Of that, the U.S. Department of Agriculture reported, 761,400 tonnes were for the 2009-10 marketing year. Sales exceeded trade expectations for 300,000 to 700,000 tonnes, and were up from 451,300 tonnes the prior week.

 

While the sales look good on the surface, a trader noted that more than 500,000 tonnes were attributed to Japan, a consistent U.S. buyer. "Some would consider that relatively routine," the trader said.

 

The market is looking ahead to the March 10 supply and demand report from the USDA. The report is expected to include updated 2009 crop estimates, and many but not all traders are expecting a slight reduction in output due to harvest problems.

 

Traders say the USDA's planting intentions report at the end of the month will likely be a more important fundamental force in the market.

 

The market faces overhead resistance, and was unable to close Wednesday above the 50-day moving average. It did, however, close above the 10-day and 40-day averages in the December contract, Benson Quinn Commodities analyst Jon Michalscheck noted in a commentary.

 

The next downside price objective for the bears is to push and close May prices below solid technical support at this week's low of US$3.76 a bushel, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at this week's high of US$3.92 a bushel.

 

First resistance for May corn is seen at Wednesday's high of US$3.89 and then at US$3.92, the technical analyst said. First support is seen at US$3.84 1/2 and then at Wednesday's low of US$3.80 3/4.