March 20, 2009
CBOT Corn Outlook on Friday: Up slightly; technical strength, inflation
Chicago Board of Trade corn futures are expected to open 1 to 3 cents higher Friday on support from soybeans and the recent weakness in the dollar, traders said.
In overnight trading, May corn was up 1 1/2 cents to US$3.98 per bushel, July corn was up 1 cent to US$4.08 and December corn was up 1 1/2 cents to US$4.29 3/4.
The market doesn't have any strong fundamental news supporting it, but the Federal Reserve's decision to buy U.S. Treasurys, announced Thursday, has shifted the focus away from fundamentals this week, traders said.
One trader said the grains markets are currently defined by whether one is bullish or bearish on the dollar.
"I say that out of frustration," the trader said. "Thank you, Fed."
The market is in a strong technical position, and the plunge in the dollar has helped shift the market psychology to "buy the break, rather than sell the rally."
Farmer selling is expected to continue keeping a lid on the market. The US$4 mark has been stiff resistance this week for that reason, traders said.
Weekly export sales reported Thursday were relatively weak, but there were two announcements of purchases Friday.
The U.S. Department of Agriculture on Friday announced private export sales of 116,000 metric tonnes of corn for delivery to South Korea in the 2008-09 marketing year. It also announced private export sales of 174,000 metric tonnes of corn for delivery to unknown destinations.
Some traders and analysts are turning their attention to planting weather, with some ideas that a wet spring might delay planting. Others say such concerns are still premature.
"It's the time of year to pay attention to it, but I'd struggle to buy off of that right now," a trader said.
The trader noted that open interest has been increasing on the rally in recent days, due to a combination of new speculative longs and farmer hedging.
A three-week-old uptrend is in place on the daily bar chart, a technical analyst said. The next downside price objective is to push and close May prices below solid technical support at US$3.75 a bushel. The next upside price objective is to push and close prices above solid technical resistance at US$4.25.
