March 13, 2009

Chicago Board of Trade corn futures are expected to open slightly higher Friday on follow-through buying following Thursday's rally and supportive outside markets, analysts said.

 

Corn is called 1 to 3 cents higher. In overnight trading, May corn was up 1 1/2 cents to US$3.86 3/4 per bushel and July corn was up 1 cent to US$3.96 1/2. March corn, which expires Friday, was down 1 3/4 cents to US$3.75.

 

Corn has rallied thanks in part to a surging equities market, which has climbed three days in a row. Outside markets, including the dollar and crude oil, seem supportive again Friday, a trader said.

 

The corn market has displayed some technical strength this week, traders said, and the May contract is seen testing resistance at the US$4 level.

 

"Wheat is in a range, beans are in a range, while corn is the one that shows signs of a breakout," a floor trader said. "We'll see if it can follow through."

 

Thursday's climb of more than 20 cents pushed the May contract above its 50-day moving average and within sight of the 100-day moving average, which the market has not closed above since July. Traders and analysts say a lot of the climb has been due to short-covering.

 

"Funds are short and covering, which triggers buy stops," Country Hedging noted in a morning commentary.

 

But a trader said there was also some new buying interest. He noted that volume was very high Thursday and that funds bought an estimated 12,000 to 14,000 contracts.

 

The trade is awaiting estimates on planted acreage from a private firm, which are expected to be released an hour after trading opens Friday. Many are expecting a bullish estimate, which supported prices Thursday, some traders said. The trade is anticipating reduced corn planted acreage for 2009, and looking ahead to the March 31 USDA planting intentions report.

 

The next downside price objective is to push and close May prices below solid technical support at this week's low of US$3.57 a bushel, a technical analyst said. The next upside price objective is to push and close prices above major psychological resistance at US$4.00.

 

First resistance for May corn is seen at Thursday's high of US$3.86 3/4 and then at US$3.93, the technical analyst said. First support is seen at US$3.80 and then at US$3.75.

 

In other news, there were 809 deliveries against the March contract.