March 5, 2010

 

CBOT Corn Outlook on Friday: Up 2-3 cents; rebound, pre-report positioning

 

 

Chicago Board of Trade corn futures are expected to open 2 cents to 3 cents higher in a rebound from Thursday losses, although the upside could be limited by technical resistance.

 

In overnight trade, March corn was up 4 cents to US$3.76 per bushel and May corn was up 3 1/4 cents to US$3.86 1/4.

 

A slightly weaker dollar and higher crude oil supported gains overnight, although the dollar has since firmed.

 

The market is rangebound and could remain so heading into Wednesday's U.S. Department of Agriculture reports, traders say. The USDA will issue new supply and demand estimates, including possible changes to the 2009 crop, which is unusual for this time of year.

 

Shawn McCambridge, senior grains analyst for Prudential Bache, said he doesn't think the report will be a big market-mover, but that it will impact traders' decisions leading up to the release, particularly because of the 2009 crop revision.

 

"When you throw something unusual into the market, that uncertainty will shake things up a little bit," McCambridge said.

 

The market is facing overhead resistance from key moving averages, and some traders note that prices have yet to fill in a gap on the technical chart dating back to a bearish January USDA report.

 

Underpinning prices are concerns about spring planting, and the possibility it will be delayed due to the heavy snow pack in the Midwest that still needs to melt. Some analysts, including McCambridge, said it is too soon to worry about planting delays, particularly when they stem from excessive moisture. That soil moisture would be good for the crop once it did get planted, he said.

 

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$3.76 a bushel.

 

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 Thursday's high of US$3.86 and then at US$3.89. First support is seen at Thursday's low of US$3.80 1/4 and then at US$3.76.