October 29, 2009

 

CBOT Corn Outlook on Thursday: Up 2-4 cents in bounce on weaker dollar

 

 

Chicago Board of Trade corn futures are expected to open higher Thursday as the market bounces on a weaker dollar and soggy weather to end the week.

 

Corn is called 2 to 4 cents higher. In overnight trading, December corn was up 2 1/2 cents to US$3.71 1/2 per bushel and March corn was up 2 3/4 cents to US$3.84 1/4.

 

The weak dollar, along with higher crude oil, could set the tone for a market that has been susceptible to outside macro market influences lately, traders said. The market is due for at least a little bounce, a trader said, as the December contract has lost 28 3/4 cents so far this week.

 

Heavy rains are expected in parts of the Midwest over the next couple of days, which could make traders nervous about the slow harvest pace, a trader added.

 

However, weather forecasts beyond that have been bearish all week and remain bearish, as farmers could have several days of drying and an ample window to harvest their crop.

 

In addition to the soggy weather that has kept farmers out of the fields in October, even those who have been able to get their combines rolling have in many cases faced further delays because of a lack of drying capacity needed to dry out all of the wet corn, analysts said.

 

Export sales remain weak, as the U.S. Department of Agriculture reported weekly net sales Thursday of 367,200 metric tonnes. That was higher than the prior week's paltry reported total of 249,500, but still at the low end of expectations.

 

The market's recent climb above US$4 weakened export demand, analysts said.

 

But now that the market has retreated, farmers are not selling, which could help keep prices firm, a floor trader said.

 

Some analysts see the market moving sideways through the end of the week as October comes to a close.

 

"Next week being the beginning of a new month may provide some skepticism with regards to which direction a possible new influx of money may want to go the grains as well as the commodity markets in general," Benson Quinn Commodities analyst Jon Michalscheck said in a market commentary.

 

The next upside price objective is to push to close prices above solid technical resistance at US$3.88 3/4 a bushel, a technical analyst said. The next downside price objective for the bears is to push to close prices below solid technical support at US$3.50 a bushel.

 

First resistance for December corn is seen at Wednesday's high of US$3.75 and then at US$3.80 3/4. First support is seen at Wednesday's low of US$3.63 3/4 and then at US$3.60.