September 25, 2008

 

CBOT Corn Outlook on Thursday: Down 3-5 cents; profit-taking, little news

 

 

Chicago Board of Trade corn futures are expected to open 3 cents to 5 cents lower Thursday on profit-taking as the market struggles for direction amid uncertainty in the financial sector, analysts said.

 

In overnight trading, December corn was down 5 3/4 cents to US$5.57 1/4 and March corn was down 5 1/2 cents to US$5.75.

 

"We think it's mostly profit-taking, end-of-quarter, end-of-month," Don Roose, president of U.S. Commodities in Des Moines, said of the weakness.

 

Lower crude oil could also weigh on the market, analysts said. The market is waiting for an outcome from government deliberations on a planned bailout of the financial sector. Traders say another plunge in the stock market would spill over into commodities.

 

The weather has remained bearish, traders said, as the potential for the crop to be decimated by an early frost diminishes with each day.

 

DTN Meteorlogix says there is "no significant concerns for maturing crops or for any early harvests for at least another 5 to 7 days," adding that beyond that there is the possibility of detrimental cold or wet weather.

 

Net export sales for the week ended Sept. 18 were reported at 547,800 metric tonnes, within analyst expectations between 300,000 and 700,000 metric tonnes. Roose said sales were "subpar" and show how a global economic slowdown is weighing on demand.

 

Weak demand is expected to continue weighing on the market, and analysts say feed wheat has become competitive with corn. Country Hedging added in a morning comment that Pilgrims Price stock plunged 38% Wednesday on word of credit problems, "another sign of minimal corn processing margins."

 

Volume in the market remains "very sluggish," said Farm Futures, although open interest did increase slightly Wednesday. "Selling from elevators could become more pronounced late in the session, especially (Friday), as the combines start rolling," Farm Futures added.

 

The next upside price objective is to push and close December prices above resistance at US$5.80 1/4, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at this week's low of US$5.35 1/4.

 

First resistance for December corn is seen at US$5.70 and then at Wednesday's high of US$5.74, the technical analyst said. First support is seen at Wednesday's low of US$5.55 and then at US$5.50.