March 26, 2010

 

CBOT Corn Outlook on Friday: Steady-up 2 cents on short-covering, dollar

 

 

Chicago Board of Trade corn futures are poised to open slightly higher Friday amid short-covering, as a weaker dollar helps the market rebound from Thursday's losses.

 

Corn is called steady to 2 cents higher. In overnight trade, May corn was up 1 3/4 cents to US$3.56 3/4 per bushel and July corn was up 1 3/4 cents to US$3.68.

 

The market is coming off a bearish day technically Thursday, in which the May contract fell through support at US$3.59, to its lowest price of the year. A stronger dollar has been a factor in the market's recent weakness, but analysts note that it was weaker overnight, which could give corn the chance to bounce.

 

Gains will likely be limited though, as the technical outlook is still bearish and fundamentals are questionable.

 

Farm Futures said in a morning commentary that traders are "wary of buying into a bearish chart pattern."

 

Warm weather forecast for the Midwest next week has also been a bearish influence as traders are awaiting Wednesday's planting intentions report from the U.S. Department of Agriculture.

 

The forecast is easing concerns about planting delays, as it will help dry the soils and prevent some farmers from switching corn acres to soybeans, as some have recently speculated. Dennis Gartman wrote in Friday's Gartman Letter than the USDA report is already being discarded.

 

"Farmers are out planting a good deal more corn and soybean acreage than they'd told the USDA's data-takers only a few days ago," Gartman said.

 

But Jerry Gidel, analyst with North America Risk Management Services, said that some of the bearish ideas are being overblown.

 

"There seems to be a concept that we're going to be planting corn next week," Gidel said.

 

While the warm weather is helping dry down fields and allow for fieldwork, it is still early for corn planting in much of the heart of the Midwest. The South, where corn normally is being planted now, has been wet recently, Gidel added.

 

The next downside price objective for the bears is to push and close prices below solid longer-term technical support at US$3.50, a technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at last week's high of US$3.76 1/2 a bushel.

 

First resistance for May corn is seen at US$3.59 and then at US$3.65. First support is seen at Thursday's low of US$3.54 and then at US$3.50.