September 17, 2009

 

CBOT Corn Outlook on Thursday: Lower as forecast lacks frost threat

 

 

Chicago Board of Trade corn futures are expected to open lower Thursday as a reduced frost threat keeps the market under pressure.

 

Corn is called 3 to 5 cents lower. In overnight trade, December corn was down 4 3/4 cents to US$3.31 1/2 per bushel and March corn was down 4 3/4 cents to US$3.34 3/4.

 

The frost threat that rallied the market sharply Tuesday is seen as a nonissue again Thursday, with forecasters saying there is little if any frost or freeze threat for late next week.

 

The warmer forecast will prompt the market to extract some weather premium, traders said, though they will continue to watch weather-model updates.

 

"With frost out of the forecast, I don't think anyone is going to trade this bullishly," a trader said. "But then those models have shifted so violently."

 

The crop is considered especially vulnerable to an early frost this year because it is late developing and needs more time to reach full maturity. Analysts have been calculating how much of the crop could be lost in a significant frost next week, but the point seems moot at the moment.

 

Trade was choppy overnight, with grains and oilseeds moving from positive to negative territory late in the session. That was due in part to a strengthening of the dollar, which could continue to weigh Thursday morning, traders and analysts said.

 

The U.S. Department of Agriculture reported weekly net export sales of 965,600 metric tonnes, down from 1.025 million tonnes the previous week but above analyst estimates of between 500,000 and 900,000 metric tonnes. Traders said the sales were neutral.

 

In export news, South Korea's Nonghyup Feed has passed on a tender issued for 110,000 metric tonnes of U.S.-origin corn, a company official said Thursday.

 

The offer prices were too high, and there are also expectations prices could ease, with the threat of an early frost in the U.S. Midwest apparently subsiding, he said.

 

The next upside price objective is to push December prices above solid technical resistance at this week's high of US$3.47 3/4 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 US$3.20 a bushel.

 

First resistance for December corn is seen at US$3.40 and then at US$3.47 3/4, the technical analyst said. First support is seen at US$3.30 and then at Wednesday's low of US$3.24.