May 16, 2008

CBOT Corn Outlook on Friday: Up 2-4 cents on outside support

Chicago Board of Trade corn futures are expected to open 2 to 4 cents higher on overnight gains and supportive outside markets, traders said.

Following Thursday's late rally, July corn was up 3 1/2 cents in overnight trading to US$6.02 1/4 per bushel, September corn was up 3 1/2 cents to US$6.14 3/4 and December corn was up 4 3/4 cents to US$6.27 1/2.

Crude oil is providing strong support to commodities, said a trader, noting that the price has climbed to a new record above US$127 per barrel. He attributed Thursday's late rally in corn to a rally in crude oil. Bullish news about a continued farmers strike in Argentina should also provide spillover support to corn, traders said.

A trader noted, however, that a stronger dollar, fueled by better-than-expected U.S. housing starts for April, could limit any rally Friday.

Dryer U.S. corn belt weather should allow farmers to remain in the fields as they try to catch up on planting progress. However, traders said the weather appears to be "neutral" at the moment, after corn traded lower for much of the week on drier long-range weather forecasts. Traders and analysts estimate that the U.S. Department of Agriculture, which reported 51% of corn plantings complete through May 11, will report 70% to 80% complete by Sunday.

DTN Meteorlogix forecasts call for periods of rain across the eastern corn belt today totaling 0.10-0.40 inches, and mostly dry conditions throughout the Midwest Saturday and Sunday. The forecast calls for warmer, dry weather across the western Midwest, where planting progress has been slower.

Thursday's late technical rebound should be encouraging to buyers, according to a technical analyst. July corn had dropped to US$5.85 before rallying back above its 50-day moving average of US$5.93.

The next upside price objective is to push prices above solid technical resistance at US$6.13 3/4, the technical analyst said. The next downside price objective is to push and close prices below solid support at US$5.83.

First resistance for July corn is seen at US$6.00 and then US$6.08, according to the analyst. First support is seen at US$5.95 and then at US$5.91 1/2.