October 22, 2009

 

CBOT Corn Outlook on Thursday: Down 1-2 cents; profit-taking, firm dollar

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday amid outside market pressure and profit-taking after Wednesday's rally.

 

Corn is called 1 cent to 2 cents lower. December corn was down 1 3/4 cents to US$3.96 1/2 per bushel and March corn was down 2 cents to US$4.08.

 

The outside markets that have recently buoyed corn--mainly the U.S. dollar as well as crude oil--are pointing corn and other commodities lower Thursday, analysts said. The dollar is firm and crude oil is slipping.

 

Traders and analysts say the dollar remains the guiding force for corn and other commodities. December corn climbed above US$4, and the 200-day moving average, Wednesday for the first time since June.

 

"We've been trading money flow," said Shawn McCambridge, senior grains analyst for Prudential Bache. "We really haven't been trading fundamentals on most of this rally."

 

Open interest and volume surged on Wednesday's climb, traders and analysts noted.

 

The rally could be slowing demand from end-users, who are unwilling to chase prices higher, analysts said.

 

Weekly export sales were weak, with the U.S. Department of Agriculture reporting net sales of 248,500 metric tonnes for the week ended Oct. 15. That total includes 14,600 tonnes for the 2010-11 marketing year.

 

Sales were well behind the prior week's total of 631,800 metric tonnes and below trade guesses between 500,000 and 900,000.

 

But a trader said the weak sales should have little effect on the market.

 

"We're here (higher) for reasons other than demand," he said.

 

The market will continue to get support from the sluggish harvest pace, and traders said that the weather remains an issue, with wet conditions likely to keep farmers sidelined through next week in much of the U.S. corn belt.

 

The corn bulls have the overall near-term technical advantage and gained more upside momentum Wednesday, a technical analyst said. Their next upside price objective is to push and close prices above psychological resistance at US$4.00 a bushel.

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.69 a bushel. First resistance for December corn is seen at Wednesday's high of US$4.03 3/4 and then at US$4.10. First support is seen at US$3.95 and then at US$3.90.