August 14, 2009
CBOT Corn Outlook on Friday: Lower on pressure from soy, fundamentals
Chicago Board of Trade corn futures are expected to open lower Friday on follow-through selling, pressure from soybeans, and a bearish crop outlook, analysts said.
Corn is called 2 to 3 cents lower. In overnight trade, September corn was down 3 cents to US$3.21 1/2 per bushel and December corn was down 3 1/4 cents to US$3.28 3/4.
The market is under technical pressure, traders said, after Thursday's initial rally fizzled and the market ended lower.
"Each one of these 'running starts' that fail make it harder to sustain a rally," Mark Gold, Top Third Ag Marketing managing partner, said in a market commentary.
Fundamentals are not working in corn's favor, traders and analysts said. They note that the U.S. Department of Agriculture is already projecting a large crop with a 159.5 bushels-per-acre yield and that the government will likely increase that estimate unless weather becomes a problem.
"Weather remains good as rain is expected early next week throughout the Midwest," Country Hedging analyst Jason Holthaus said in a morning commentary. "That along with mild temperatures should be near perfect weather for kernel fill."
Three University of Illinois researchers have increased their corn production forecast from July estimates, according to a Thursday report.
The report, from ag economists Scott Irwin and Darrel Good, and T-storm Weather meteorologist Mike Tannura, said that a composite estimate of the 2009 crop puts total production at 12.937 billion bushels, with a 161.7 bushels-per-acre yield.
That is above the trio's previous July forecast of 12.344 billion bushels with a 154.1 bushels-per-acre yield. The USDA on Wednesday projected the crop at 12.761 billion bushels, with a 159.5 bushels-per-acre yield.
Technically the market had a bearish day Thursday, traders said. One trader said December corn must hold support around US$3.21 1/2.
"You take that out, you're destined for a new contract low," he said.
The market will continue to track soybeans, which are expected to open lower Friday. But some traders said that corn is likely to gain on soybeans given the soybean-to-corn ratio has been trading historically high, above 3-to-1.
The next upside price objective is to push December prices above solid technical resistance at US$3.50 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 the contract low of US$3.14 3/4 a bushel.
