June 26, 2009

 

CBOT Corn Outlook on Friday: Up slightly, helped by position squaring

 

 

Chicago Board of Trade corn futures are expected to open higher Friday following modest overnight gains amid position-squaring heading into the weekend and before next week's acreage report.

 

Corn is called up 1 to 2 cents. In overnight trade, July corn was up 1 cent at US$3.83 1/2 a metric tonne and December was up 1 1/4 cent at US$4.02 3/4.

 

Analysts said weather is still a bearish factor, which could pressure things.

 

"Everything is happily and speedily growing," said Sterling Smith, market analyst at Country Hedging.

 

Mostly dry conditions with some light showers are expected through the day and into tomorrow, when scattered showers and thunderstorms will move west to east, said DTN Meteorlogix. The forecast said temperatures will be near to above normal through Sunday, when things will cool off a bit to below normal temperatures in the east corn belt.

 

Outside markets are lending some support with a weaker U.S. dollar and higher crude, but Smith said the market to watch is July soybean futures.

 

"Front-month beans are the star of the grain room and I think that they may lend a touch of strength to corn," Smith said. He added that a breakout in beans could mean movement in corn.

 

Analysts are also looking ahead to the U.S. Department of Agriculture's acreage report and grain stocks report on Tuesday. In the short-term, traders and analysts are keeping an eye on today's quarterly hog and pig report for clues to feed demand.

 

According to a Dow Jones Newswires survey of 18 analysts, the USDA's acreage forecast is expected to be 84.158 million acres, a decrease from the USDA's March forecast of 84.986 million acres. A survey of 15 analysts showed expectations on average for the USDA to peg grain stocks as of June 1 at 4.190 billion bushels.

 

While outside markets are expected to add some support today, the same scenario yesterday didn't stop corn from selling off, which could suggest traders are focusing more on supply and demand fundamentals, a technical analyst said.

 

It appears a near-term market top is in place, unless a serious weather scare occurs in the next few weeks to ignite a fresh bull market run in corn, the technical analyst said.

 

First resistance for December corn is seen at Thursday's high of US$4.08 1/2 and then at US$4.15. First support is seen at this week's low of US$4.00 and then at US$3.95.

 

July grain options expire on today's close.