June 5, 2009

 

CBOT Corn Outlook on Friday: Lower on outside pressure, profit-taking

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents lower Friday amid outside market pressure and light profit-taking ahead of the weekend, traders said.

 

In overnight trading, July corn ended down 4 1/2 cents to US$4.44 per bushel and December corn ended down 4 3/4 cents to US$4.66 3/4.

 

Corn is expected to follow outside markets amid a lack of its own significant news. Although equities are expected to gain following a better-than-expected jobs report Friday, the dollar is also higher, which is bearish for the market.

 

"I think we're more dollar-driven that equity-driven" a trader said.

 

Traders and analysts say there could be some light profit-taking ahead of the weekend. But it will be limited, they said, because traders will be wary of bailing out on a market that has such a strong up-trend.

 

July corn missed setting a new yearly high close Thursday by only a penny, said Mark Gold, managing partner of Top Third Ag Marketing, said in a commentary. Closing above that high on Friday would "open the door" to another 30 cents of gains, he said.

 

"If the crude oil doesn't fall apart I see no reason why corn shouldn't stay strong for at least another week or two," Gold said.

 

The trade is starting to look ahead to next week's supply and demand report, which will be issued Wednesday at 8:30 a.m. EDT by the U.S. Department of Agriculture. Traders are not expecting major changes in the report, but will be eyeing it to see if the USDA cuts its yield forecast.

 

Crop concerns continue to underpin the market. After a slow start to planting, traders say the crop could be further delayed by unseasonably chilly weather across the U.S. corn belt.

 

The next upside price objective is to push and close July prices above solid technical resistance at US$4.85 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 last week's low of US$4.21 3/4 a bushel.

 

First resistance for July corn is seen at this week's high of US$4.50 and then at US$4.55. First support is seen at US$4.40 and then at US$4.35.