March 11, 2010

 

CBOT Corn Outlook on Thursday: Down slightly on exports, follow-through

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday on follow-through selling and poor weekly export sales.

 

Corn is called 1 to 3 cents lower. In overnight trade, March corn was down 1/2 cent to US$3.55 per bushel and May corn was down 1 cent to US$3.64 1/2.

 

The market had traded higher for part of the overnight session before retreating and closing near the session's low. Traders expect follow-through selling Thursday after the market fell Wednesday, thanks in part to a bearish U.S. Department of Agriculture supply and demand report.

 

The USDA report increased ending stocks for corn. The government also increased wheat ending stocks, above what some see as the psychologically significant 1-billion-bushel threshold.

 

Bearishness in wheat could serve as an anchor to corn, said Mike Zuzolo, president of Global Commodity Analytics and Consulting.

 

"I feel strongly at this time that even if the corn experiences planting delays in the '10 crop, the wheat will continue to be a weight and Achilles Heel to the upside price potential," Zuzolo said.

 

A floor trader said that while the corn market may not have a lot more downside potential, it needs a catalyst to break it out of its recent downtrend. For now, weak demand is not going to help bulls.

 

The USDA reported export sales of 338,900 metric tonnes for the week ended March 4. That's well below trade estimates ranging from 475,000 to 950,000, and off the prior week's total of 833,400 metric tonnes.

 

Traders are starting to turn their attention to spring planting, and warm weather in the forecast is mostly seen as bearish, despite flooding in parts of the Midwest.

 

The market is seen as bearish technically. Traders say the downside could be limited, however, in part because the market seemed to anticipate Wednesday's bearish report, with prices falling on the previous days.

 

The next downside price objective for the bears is to push and close May prices below solid technical support at the February low of US$3.59 a bushel, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at US$3.80 a bushel.

 

First resistance for May corn is seen at Wednesday's high of US$3.70 3/4 and then at US$3.75 1/4, the technical analyst said. First support is seen at Wednesday's low of US$3.62 1/2 and then at US$3.59.