May 29, 2008

 

CBOT Corn Outlook on Thursday: 3-4 cents lower on outside markets

 

 

Chicago Board of Trade corn futures are expected to open 3-4 cents lower Thursday, following overnight losses due to outside markets, traders said.

 

In overnight trading, July corn was down 4 1/4 cents to US$5.88 1/4 per bushel, September corn was down 3 1/2 cents to US$6.02 and December corn was down 3 3/4 cents to US$6.15 3/4.

 

Weaker crude oil and a stronger dollar index could keep prices lower at the start of trading, traders said. A trader said a stronger dollar in particular will cause weakness in corn and other commodities.

 

"None of these commodities are holding their gains," the trader said. "The dollar is forcing them lower."

 

But traders and analysts said if crude rallies and the dollar falls, corn will follow suit and prices will likely climb.

 

Downward pressure will be felt from a warming trend in the U.S. corn belt over the next few days that could support crop emergence and ease fears of reduced yields, some analysts say. The forecast from DTN Meteorlogix calls for normal or above normal temperatures across the corn belt through Monday.

 

Tuesday's decision by the U.S. Department of Agriculture to open up 24 million acres for cattle grazing is a psychological blow to the market, analysts say. One analyst called the decision "a shot across the bow" that signaled the government was going to take steps to fight rising food costs.

 

An analyst adds that continued weakness in rice is spilling over into corn. The analyst said traders continue to associate corn, wheat, and rice as the three main cereal crops around the globe because many international agencies view them this way. July rice has traded limit down for three straight days and is at its lowest level since March 20.

 

Corn remains in the same trading range it has been in for weeks, between US$5.80 and US$6.20. A trader said the market found technical strength below US$5.90 on Wednesday, as commercial buyers started buying from index funds, which have been liquidating.

 

The next upside price objective is to push July corn prices above solid technical resistance at US$6.00. The next downside price objective is to push and close prices below solid support at US$5.79 1/4.

 

First resistance for July corn is seen at Wednesday's high of US$5.96 3/4 and then at US$6.00. First support is seen at US$5.90 and then at Wednesday's low of US$5.85.