October 26, 2007

 

CBOT Corn Outlook on Friday: Up 3-4 cents; dollar weakness supports prices

 

 

Corn futures on the Chicago Board of Trade are expected to open Friday's day session on firm footing, taking its cue from overnight action, as weakness in the U.S. dollar underpins commodity markets in general.

 

Analysts expect corn to open 3 to 4 cents higher.

 

In overnight electronic trading, December corn was 4 1/4 cents higher at US$3.70 1/2, and March corn was 4 cents higher at US$3.87.

 

"The dollar hit a new record low once again overnight, sending precious metals prices higher, while crude oil hit an all-time high of US$92.22 per barrel. That lifted grain prices as well, setting a positive tone for this morning's opening calls," said Arlan Suderman, analyst with Farm Futures.

 

A quiet news front will keep corn leaning on outside markets for direction, with fund and technically based buying featured amid the supportive influences of inflation based commodities, analysts said.

 

Spillover support from soybeans and wheat will aide the firm tone as well, a CBOT broker added.

 

A technical analyst said market bulls still have an uptrend in place from the October low and regained some fresh upside technical momentum. The next upside price objective is to push December prices above solid resistance at last week's high of US$3.71. The next downside price objective is to close prices below solid support at this week's low of US$3.55 3/4.

 

First resistance for December corn is seen at Thursday's high of US$3.67 and then at US$3.71. First support is seen US$3.63 and then at Thursday's low of US$3.59 1/4.

 

However, with favorable harvest weather on tap for the weekend, upside potential could be limited with hedge related pressure and pre-weekend position squaring expected to surface before the end of the day, analysts said.

 

The DTN Meteorlogix Weather Service forecast said dry conditions or possibly a little light precipitation is on tap for the western U.S. Midwest Friday and Saturday. Mainly dry conditions are seen for Sunday. Temperatures will average near to slightly above normal. Mainly dry conditions are expected Monday and Tuesday, with temperatures averaging above normal.

 

In the eastern Midwest, there is a chance for light rain or drizzle Friday. Showers end early Saturday over northern areas, with mainly dry conditions expected Sunday. Temperatures will average near to above normal Friday and Saturday, and near normal Sunday.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled mostly higher. The benchmark May 2008 contract settled RMB10 higher at RMB1,651/tonne.