May 30, 2008

 

CBOT Corn Outlook on Friday: Lower open, but firm on fundamentals

 

 

Chicago Board of Trade corn futures are expected to open 1 to 2 cents lower Friday on overnight losses, but analysts expect the market to be firmer on fundamental strength and outside markets.

 

In overnight trading, July corn was down 3 1/2 cents to US$5.78 3/4 per bushel, September corn was down 3 1/2 cents to US$5.91 3/4 and December corn was down 4 cents to US$6.05 1/2.

 

Corn prices have dropped throughout the week, but an analyst said the market should be firmer today as traders focused on fundamentals will decide corn is at a good purchase price.

 

"I think we're going to find some support here today," said Shawn McCamrbidge, senior grains analyst with Prudential-Bache in Chicago. "It seems like a lot of the liquidation we've had is really non-fundamental related,"

 

Fundamentals remain strong, he said, because of late planting and delayed emergence that could cause lower yields. He added that heavy rains in western and southern parts of the corn belt, particularly Iowa and Missouri, are causing many farmers to replant.

 

Outside markets, particularly crude oil, will continue to influence corn, analysts said.

 

Concern that the Commodity Futures Trading Commission will move to limit the role of speculators will weigh on the market, traders and analysts said. The CFTC announced Thursday it was in the midst of a 6-month investigation into possible price manipulation in U.S. oil markets, and analysts say it could mean it will look at other commodities as well.

 

A trader said Thursday's drop of July corn below US$5.80, the low-end of a two-month trading range, could signal more technical selling. He said he sees corn headed toward its 100-day moving average of US$5.67 1/2.

 

But McCambridge said Thursday's rebound to close above US$5.80 showed there were still buyers supporting the market.

 

Analysts say yields typically decline for corn planted after mid-May.

 

A lower close Friday could suggest a near-term market top is in place, a technical analyst said. The next upside price objective is to push July corn prices above solid technical resistance at US$6.00, the analyst said. The next downside price objective for the bears is to push and close prices below solid support at Thursday's low of US$5.72 3/4.

 

First resistance for July corn is seen at Thursday's high of US$5.94 3/4 and then at US$6.00. First support is seen at US$5.79 1/4 and then at Thursday's low of US$5.72 3/4.

 

The U.S. Department of Agriculture reported corn export sales of 703,400 metric tonnes for the week ended May 22, compared to 776,100 metric tonnes the prior week. Analysts estimated sales between 450,000 and 900,000 metric tonnes.

 

In world news, the International Grains Council projects world ending corn stocks of 95 million bushels for the 2008-09 marketing year, a drop of 23 million bushels from 2007-08.