June 4, 2009

 

CBOT Corn Outlook on Thursday: Up 3-5 cents in rebound; slow crop supports

 

 

Chicago Board of Trade corn futures are expected to open higher Thursday as the market recovers from Wednesday's slide and concerns about the crop give underlying support.

 

Corn is called 3 to 5 cents higher. In overnight trading, July corn was up 5 1/4 cents to US$4.37 3/4 per bushel, September corn was up 5 cents to US$4.47 1/2 and December corn was up 5 1/2 cents to US$4.60 1/2.

 

The market rebounded overnight following the steep losses Wednesday, which were caused by profit-taking amid ideas the market was overbought and technical selling. The July and December contracts dipped below their 200-day moving averages Wednesday, but analysts said the market is still on an uptrend.

 

The recent surge in corn, as well as Wednesday's drop, has had more to do with investors' money flow and the direction of the U.S. dollar than it has fundamentals, traders and analysts said.

 

"The complex had added US$.80 of value over the previous five weeks and for some reason they elected to pick (Wednesday) to give roughly 21% of it back," Benson Quinn Commodities analyst Jon Michalscheck said in a market commentary.

 

Concerns about the crop will continue to provide underlying support to the market, analysts said. The DTN Meteorlogix forecast calls for dry weather through most of the U.S. corn belt Thursday and Friday, except for rain in southeast areas Thursday.

 

Rains will return over the weekend, with showers and thundershowers in the northwest corn belt Saturday and Sunday and rain across the Midwest on Monday.

 

The rainfall is seen as beneficial for the crop that has been planted but another headache for those farmers in Illinois and Indiana still trying to finish up. Some traders and analysts note that unseasonably cool weather throughout the Midwest is not helping crop development.

 

The U.S. Department of Agriculture reported relatively weak export sales Thursday. The USDA reported weekly net export sales of 658,800 metric tonnes, down from 1.023 million tonnes the previous week. The sales included 604,500 for the 2008-09 marketing year and 54,300 for 2009-10.

 

Trade estimates for sales this week ranged from 600,000 to 1.050 million tonnes.

 

Despite Wednesday's drop in prices, no chart damage occurred Wednesday, a technical analyst said.

 

The next upside price objective is to push and close July prices above solid technical resistance at US$4.85 a bushel, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$4.21 3/4 a bushel.

 

Resistance is seen at US$4.45, the technical analyst said. First support is seen at Wednesday's low of US$4.30 1/4 and then at US$4.25.