October 8, 2009

 

CBOT Corn Outlook on Thursday: Higher on dollar, cold weather forecast

 

 

Chicago Board of Trade corn futures are expected to open 2 cents to 4 cents higher Thursday on weakness in the dollar and concern about a looming freeze in parts of the U.S. corn belt.

 

In overnight trade, December corn was up 4 1/2 cents to US$3.64 1/4 per bushel and March corn was up 4 1/4 cents to US$3.76 1/2.

 

The dollar, which helped fuel strong gains Monday and Tuesday, is weak again Thursday, which is supportive for corn and other commodities, analysts said. A weaker dollar makes U.S. exports more attractive.

 

Meanwhile, the trade is eying a cold snap descending on parts of the Midwest this weekend.

 

T-storm Weather said in a morning forecast that cold weather will gradually end the growing season over the weekend in the northwest corn belt. Meanwhile, southeast parts of the corn belt are seeing substantial rain, which is not good for late maturation or harvesting.

 

Analysts differ on how much of a hit the crop could take from a freeze. But with only 57% of the U.S. crop mature as of Sunday, much of the crop could still use some added time for development, some analysts said.

 

Only 37% of the Minnesota crop was mature as of Sunday. North Dakota's corn was only 23% mature, and in South Dakota maturity was at 57%.

 

Analysts note there are also forecasts calling for more cold weather and a potential freeze for next weekend that would include areas further east in the corn belt.

 

Weekly net export sales reported Thursday were unexpectedly weak. The U.S. Department of Agriculture reported net sales of 521,900 metric tonnes for the week ended Oct. 1, below the prior week's total of 1.22 million. Analyst guesses ranged from 600,000 to 1 million metric tonnes.

 

Overall, traders say that the demand picture for corn is brightening, with good margins for ethanol producers stimulating corn demand.

 

The corn's next upside price objective is to push December prices above solid technical resistance at the August high of US$3.76 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 this week's low of US$3.27 1/2 a bushel.

 

First resistance for December corn is seen at Wednesday's high of US$3.64 and then at this week's high of US$3.70. First support is seen at Wednesday's low of US$3.54 and then at US$3.50.