October 16, 2009

 

CBOT Corn Outlook on Friday: Steady-up slightly; outside markets eyed

 

 

Chicago Board of Trade corn futures are expected to open flat to 2 cents higher Friday, with two-sided trade and position evening ahead of the weekend expected.

 

In overnight trade, December corn was up 1/2 cent to US$3.73 1/2 per bushel and March corn was flat at US$3.85.

 

After dropping by a dime in a correction on Thursday, the market is expected to be more stable Friday, with traders keeping an eye on outside markets.

 

"We think the corn is going to have a two-sided trade," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. "The market overnight limited by the fact the dollar moved higher. That seemed to stall the rally."

 

Roose and other analysts note improved weather forecasts with warming expected at the end of the weekend and into early next week should help move the sluggish harvest along.

 

"Absent further weather disruptions, we contend that the market is likely to feel some harvest pressure as farmers are able to get into their fields," Morgan Stanley analyst Hussein Allidina said in a research note Friday.

 

But Roose said that with more wet weather expected later next week, the harvest window will be relatively small, and that the market could stay firm without a "clear knockout punch on the harvest."

 

Export sales were lackluster, but within trade expectations. The U.S. Department of Agriculture reported sales of 631,800 metric tonnes, up from 521,900 metric tonnes. Traders had expected sales between 550,000 and 900,000 metric tonnes. Roose said the report was "neutral."

 

Analysts say that while ethanol demand remains strong, the market's recent rally has not helped export demand. They said Taiwan purchased 52,000 metric tonnes of corn from Brazil, which Farm Futures said is "another indication prices may have gotten ahead of demand.

 

The market's climb could also be another blow to a livestock industry trying to get back on its feet, analysts warn.

 

The next upside price objective is to push and close December prices above psychological resistance at US$4.00 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 September high of US$3.47 3/4 a bushel.

 

First resistance for December corn is seen at US$3.75 and then at US$3.80, the technical analyst said. First support is seen at Thursday's low of US$3.68 1/2 and then at US$3.60.