May 22, 2009

 

CBOT Corn Outlook on Friday: Higher on dollar, soybean surge

 

 

Chicago Board of Trade corn futures are expected to open higher Friday on weakness in the dollar, strength in the soy complex and lingering weather concerns, traders said.

 

Corn is called 3 to 5 cents higher. In overnight trade, July corn was up 5 1/4 cents to US$4.29 1/4 per bushel and December corn was up 5 cents to US$4.50 1/2.

 

A bearish dollar, along with continued gains in crude oil, will set a supportive tone early for corn and commodities in general, traders said. The soybean market, which continues to lead corn, is also expected to climb.

 

Uncertainty about the weather and planting progress in the eastern U.S. corn belt ahead of the weekend should make the trade cautious, a floor trader said. He added that funds that are long headed toward the weekend might feel compelled to shed those positions if the dollar "finds its footing" later in the session.

 

Analysts and traders are offering mixed and opposing views of weather forecasts. Midwest Market Solutions said in a market commentary that weather forecasts "look nearly ideal for corn production," while Farm Futures said rain totals for the eastern corn belt in the next five days "look rather ominous."

 

DTN Meteorlogix said in a forecast that "significant rainfall develops over the weekend continuing into early next week slowing planting progress once again," but drier weather returns during the middle to latter part of next week.

 

While the wet weather in Illinois, Indiana and Ohio has kept the planting pace at a crawl and been the focus of the trade, traders and analysts noted Friday that concerns are starting to emerge about dryness in the western corn belt. But they also noted that rain is in the forecast for the western belt.

 

Views also differ as to how much planting is getting done in Illinois, the second-largest corn producing state. Heavy rains last week flooded some fields, and agronomists say many farmers needed several days of dry weather before they could plant.

 

The next upside price objective is to push and close July prices above solid technical resistance at the January high of US$4.49 1/4 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$4.00 a bushel.

 

First resistance for July corn is seen at Thursday's high of US$4.29 and then at this week's high of US$4.34 3/4, the technical analyst said. First support is seen at US$4.20 and then at Thursday's low of US$4.17 1/4.