March 19, 2009

 

CBOT Corn Outlook on Thursday: Up 8-10 cents on weakness in dollar

 

 

Chicago Board of Trade corn futures are poised to open higher Thursday as a weaker dollar lifts commodities across the board, analysts said.

 

Corn is called 8 to 10 cents higher. In overnight trading, May corn was up 9 3/4 cents to US$3.98 per bushel, July corn was up 10 cents to US$4.08 1/2 and December corn was up 10 1/4 cents to US$4.29.

 

The Federal Reserve's announced plan Wednesday to buy U.S. Treasurys is inflationary, and thus good for commodities prices, traders said.

 

"It kind of brings the focus away from market fundamentals and to whether or not we're going to generate the type of investment that took us to all-time highs last year," said Shawn McCambridge, senior grains analyst for Prudential Bache. "I think that's the focus here, probably through today's session."

 

Investors have fled to the dollar as a safe haven amid the global economic crisis, but now are looking for somewhere else to put their money, analysts said. In addition to corn, others poised to climb are wheat, soybeans, crude oil and gold, traders said.

 

The dollar's movement has shaken the corn market loose from range-bound, low-volume trade of the past couple days, analysts said. Traders had expected that to continue until the highly anticipated March 31 planting intentions report, but the break in the dollar has changed that dynamic.

 

"We saw what happens when you have the huge amount of investment money that don't really look at market fundamentals come into a market," McCambridge said. He said that's "generating concerns for the short side of the market."

 

There is little fundamental news strong enough to give the market direction, traders and analysts said.

 

Weekly net export sales were reported at 440,600 metric tonnes Thursday, down 60% from the previous week and 52% from the prior four-week average, the U.S. Department of Agriculture said. The sales were also below trade estimates of 500,000 to 800,000 metric tonnes.

 

In other export news, the U.S. Department of Agriculture announced Thursday private export sales of 116,000 metric tonnes of corn for delivery to South Korea in the 2008-09 marketing year.

 

A climb above US$4 in the May contract could generate more buying, analysts said, but it could also prompt more of the farmer selling that has helped keep a lid on the market in recent days.

 

The next downside price objective for the bears is to push and close May prices below solid technical support at US$3.70 a bushel, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at US$4.25.

 

First resistance for May corn is seen at Wednesday's high of US$3.91 1/4 and then at US$3.95 1/4. First support is seen at Wednesday's low of US$3.84 3/4 and then at this week's low of US$3.81 1/2.