June 18, 2009

 

CBOT Corn Outlook on Thursday: Down 1-2 cents; overnight trend; exports strong

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday following modest overnight losses, while strong weekly export sales support.

 

Corn is called 1 to 2 cents lower. In overnight trading, July corn was down 2 3/4 cents to US$4.05 per bushel, September corn was down 2 3/4 cents to US$4.13 1/2 and December corn was down 2 1/2 cents to US$4.26 1/4.

 

The market is lacking any strong news to set the direction, a trader said, and will likely drift lower on the open following the overnight losses. Outside markets should add a little pressure, he said, as the dollar remains strong.

 

Views of the weather are mixed, with the ample rainfall and warming temperatures seen as beneficial to the corn crop, which has already been planted. But traders and analysts also noted heavy rains overnight, particularly in the southern corn belt.

 

"From what I've seen, they're more nervous about heavy rains being bullish, especially south of I-70 because of how delayed they are, how small their crops are, how much their soils are already saturated," said Mike Zuzolo, senior analyst for Risk Management Commodities.

 

A trader conceded that the rains could prompt some replanting in the wettest areas, but added that "I don't think the trade is concerned about it."

 

The U.S. Department of Agriculture reported strong weekly net export sales. Sales for the week ended June 11 were 1.144 million metric tonnes, including 767,300 tonnes for the 2008-09 marketing year and 376,200 tonnes for 2009-10.

 

Total sales were up from 863,000 the week before, and at the high end of expectations. Estimates had ranged from 600,000 to 1.150 million tonnes.

 

Zuzolo said there are concerns about weakening demand due to liquidation in the livestock sector, which doesn't appear primed to bounce back any time soon. But he added that on the positive side, the prospects for ethanol will be improved as long as crude oil stays above US$60. It was above US$70 in morning trade.

 

The bulls' next upside price objective is to push and close July prices above solid technical resistance at US$4.50 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below psychological support at US$4.00 a bushel.

 

First resistance for December corn is seen at US$4.32 3/4 and then at US$4.38. First support is seen at US$4.25 and then at Wednesday's low of US$4.19 1/4.