July 9, 2009

 

CBOT Corn Outlook on Thursday: Up amid short-covering; market oversold

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents higher Thursday amid outside market support and short-covering ahead of Friday's supply and demand report, traders said.

 

In overnight trade, July corn, which is in delivery, was up 3/4 cent to US$3.40 per bushel, while September corn was up 3 1/4 cents to US$3.28 1/2 and December corn was up 4 1/2 cents to US$3.38 3/4.

 

The overnight bounce was due to oversold conditions and short-covering ahead of Friday's report, traders said.

 

"We're working with a market that's more oversold than it's been in over a year," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. "It's a market that's squaring positions ahead of the report."

 

Corn has plunged 58 cents since a June 30 report from the U.S. Department of Agriculture that showed corn plantings much higher than expected, and the market set new lows Wednesday. The USDA will issue a supply-and-demand report Friday at 8:30 a.m. EDT.

 

Strong export sales should lend support Thursday, Roose said. The USDA report weekly net sales of 1.165 million metric tonnes, including 749,200 tonnes for the 2008-09 marketing year and 415,400 tonnes for the 2009-10 marketing year. Analyst estimates for total sales had ranged from 700,000 to 1.150 million tonnes. Sales last week totaled 1.272 million tonnes.

 

Both the size and condition of the crop are weighing on the market, analysts said. A trader said that while the weather in the U.S. corn belt is expected to be cool over the next several days, that should pose little harm to the crop. Roose noted that most of the corn belt should get some rain over the next several days.

 

Outside markets, which have been bearish, should offer some support Thursday, the trader said, as the dollar is weaker and crude oil is stronger.

 

The next upside price objective is to push and close prices above solid technical resistance at US$3.70 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below strong longer-term technical support at US$3.25 a bushel.

 

First resistance for December corn is seen at Wednesday's high of US$3.40 3/4 and then at US$3.45. First support is seen at Wednesday's contract low of US$3.30 3/4 and then at US$3.25.