September 11, 2008

 

CBOT Corn Outlook on Thursday: Down 2-3 cents; cautious pre-report trade

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday on pressure from outside markets and concerns about world commodity demand, but traders will likely be cautious ahead of Friday's crop production report, analysts said.

 

Corn is called 2 to 3 cents lower. In overnight trading, September corn was down 3 1/2 cents to US$5.19 per bushel, December corn was down 3 1/4 cents to US$5.33 1/2 and March corn was down 4 3/4 cents to US$5.51.

 

The market continues to have little of its own fundamental support, and outside markets such as crude oil and the dollar could continue weighing on the market in an environment of general commodity liquidation, analysts said.

 

John Kleist, broker/analyst with Allendale in McHenry, Ill. said the market will likely "chop around" ahead of Friday's crop production report. Analysts on average expect the government will lower both yield and production projections, although estimates vary widely.

 

The report, along with new supply and demand estimates, will be released Friday at 8:30 a.m., EDT.

 

The DTN Meteorlogix forecast calls for temperatures to remain above freezing in the U.S. corn belt during the next 10 days. Rainfall late this week and into the weekend will favor filling crops, although Hurricane Ike could cause flooding, according to the forecast.

 

Late-season rainfall is seen by some as boosting the crop, although others say its benefit to corn at this point is limited.

 

The USDA reported export sales of 376,300 metric tonnes. Analysts expected between 350,000 and 600,000 metric tonnes.

 

The December contract has dropped from an intraday high of US$6.25 on Aug. 23. The contract set a low of US$5.04 1/2 on Aug. 8, and the market's recent slump has raised the possibility of testing August lows, analysts said.

 

"From a technical standpoint, it seems to indicate we can," Kleist said. "We'll see if the report allows it."

 

The next upside price objective is to push and close December prices above solid technical resistance at the July low of US$5.62 3/4, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at US$5.25.

 

First resistance for December corn is seen at Wednesday's high of US$5.48 and then at US$5.50. First support is seen at Wednesday's low of US$5.35 1/4 and then at this week's low of US$5.31.