June 12, 2009

Chicago Board of Trade corn futures are expected to open lower Friday on a stronger dollar and weaker crude oil as the market continues its see-saw pattern.

 

Corn is called 2 to 3 cents lower. In overnight trade July corn was down 3 cents to US$4.38 per bushel, September corn was down 2 3/4 cents to US$4.47 1/4 and December corn was down 3 cents to US$4.60 1/4.

 

The market has alternated between gains and losses all week, ending lower Monday and Wednesday and higher Tuesday and Thursday. Traders and analysts say the market has little of its own fundamental news, as the weather is mixed and Wednesday's supply and demand report said nothing unexpected.

 

That leaves the market subject to outside markets, particularly the dollar. A stronger greenback, along with weaker crude oil and soy, should weigh on corn Friday, analysts said.

 

"Going into the weekend I think we'll see some light selling coming in but I also think we'll be generally range-bound," said Shawn McCambridge, senior grains analyst with Prudential Bache. "We've been able to find very good support resting under this market on any modest price break, and I think that pattern's going to continue."

 

Warmer weather is expected for next week, which would be good for the crop. However, traders and analysts say there's still enough concern about the late-planted crop to support a "buy-the-break" mentality.

 

The market has been trading in a sideways pattern, with July corn seen between US$4.30 and US$4.50.

 

The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$4.50 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$4.21 3/4 a bushel.

 

First resistance for July corn is seen at US$4.45 and then at Thursday's high of US$4.47 1/2, the technical analyst said. First support is seen at Thursday's low of US$4.36 and then at this week's low of US$4.33 1/4.

 

Although feed demand is weak and analysts say there are questions about ethanol demand, exports have remained relatively solid.

 

In export news Friday, a group of South Korea feedmakers led by the Korea Feed Association purchased 165,000 metric tonnes of U.S.-origin corn in a tender concluded late Thursday, a KFA official said Friday.

 

Also, South Korea's Nonghyup bought 275,000 metric tonnes of corn and 55,000 tonnes of feed wheat in a tender concluded late Thursday, a trader with the company said Friday.

 

Those corn cargos were bought from Marubeni, Cargill and AIM.