April 4, 2008

 

CBOT Corn Outlook on Friday: 1-2 cents lower on light profit-taking

 

 

Chicago Board of Trade corn futures are expected to open 1-2 cents a bushel lower after prices reached technically overbought conditions and as traders take some profits ahead of the weekend, analysts said Friday.

 

Overnight trading saw May corn lose 1 1/4 cents to US$5.98 3/4, July was down 1 1/4 cents to US$6.12 1/4 and new-crop December was down 3/4 cent to US$6.09 1/2.

 

Soybeans and corn are locked in a battle for planted acres, and while some analysts say corn holds an edge over soybeans in profitability per acre, beans are gaining back ground.

 

"New-crop beans put on another 25 cents (Thursday), which means the 7-cent rise in December corn futures didn't allow the corn side of the corn versus bean argument to gain ground," one Iowa corn processor said.

 

But corn does have solid fundamental momentum behind it with concerns over planting, smaller acreage than last year and a tightening stocks situation, all of which are expected to keep support underneath the market.

 

Higher calls for soybeans and wheat may also lend spillover support to corn, a trader said.

 

Traders will also keep an eye on key outside markets after the Labor Department's employment report showed nonfarm payrolls fell 80,000 in March for its largest drop in five years. Payrolls fell by 76,000 in both January and February, after being revised to show larger losses.

 

In addition, the unemployment rate jumped 0.3 percentage point to 5.1%, its highest since September 2005.

 

Speculative selling linked to the worsening economic picture will need to be monitored, one trader said, for fear it could spill over into the Chicago grain pits.

 

The precious metals markets are lower, but stocks seem to be handling the news fairly well as the Dow Jones industrial average and the Standard & Poor's 500 index are both up slightly in electronic trading ahead of the opening bell.

 

In weather news, much of the southern corn belt remains too soggy for farmers to begin planting as rain continues to fall.

 

Another round of showers and thunderstorms is moving through the middle and lower Mississippi River and Ohio River valleys Friday morning, which is expected to produce more flooding of low-lying fields and rivers. The long-range outlook suggests this weather pattern will repeat next week, said private forecaster DTN Meteorlogix.

 

Conditions are expected to dry Saturday and Sunday, though there are chances for more precipitation and showers on Monday and Tuesday.