July 17, 2009

 

CBOT Corn Outlook on Friday: Up 1-2 cents amid short-covering bounce

 

 

Chicago Board of Trade corn futures are expected to open higher Friday in a short-covering rebound following recent losses, traders said.

 

Corn is called 1 to 2 cents higher. In overnight trade, September corn was up 2 cents to US$3.18 3/4 per bushel, December corn was up 2 cents to US$3.27 1/4.

 

Traders and analysts say there's little reason for the market to climb, other than the sentiment that the market is oversold after sharp recent losses.

 

"Corn and soybeans prices are firm today but only as a rebound from the weather/production induced sell-off yesterday, for even reports of increased export business is not sufficient to offset the impact of the truly excellent grain growing weather N. America has enjoyed thus far this season," Dennis Gartman wrote in Friday's edition of the Gartman Letter.

 

Thursday's trade was bearish technically, analysts said, as the market set new contract lows.

 

"In the absence of a close above the 344/49 area, the risks are for (December) corn to post new lows for the month and drop further to important support near 308 and then 285 in the medium term," Barclays Capital said in a report.

 

The next upside price objective is to push and close December prices above solid technical resistance at this week's high of US$3.49 1/4 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below major psychological support at US$3.00 a bushel.

 

First resistance for December corn is seen at US$3.30 and then at US$3.35, the technical analyst said. First support is seen at Thursday's contract low of US$3.24 1/2 and then at US$3.20.

 

Weather remains the key bearish factor in the market. Weather is cool - perhaps a little cooler than would be ideal, according to a couple of traders - but there is no sign of an extended heat wave or dry spell that would stress the crop during its crucial pollination season.

 

The influence of movements in other markets should limit any gains in corn, traders said, as the dollar was higher and crude oil lower Friday morning.