November 5, 2009

 

CBOT Corn Outlook on Thursday: Down slightly; good harvest weather

 

 

Chicago Board of Trade corn futures are expected to open slightly weaker on Thursday amid good harvest weather and light outside market pressure.

 

Corn is called 1 to 2 cents lower. In overnight trading, December corn was flat at US$3.84 per bushel and March corn was down 1/4 cent to US$3.97 1/4.

 

Warm weather this weekend and a dry outlook generally will limit corn's upside potential, analysts said.

 

"The combination of sunshine, warmth and dryness provide ideal weather for drying, harvesting and planting over the next four days," T-storm Weather meteorologist Mike Tannura said in a morning outlook.

 

Harvest progress will pick up with the weather, which should resolve short-term problems with the supply pipeline that have underpinned prices recently, analysts said.

 

However, questions remain about the quality of the crop and its potential effect on the market.

 

The market has been dominated in recent weeks by outside markets, including the dollar and crude oil, which could pressure corn slightly early Wednesday.

 

Traders say that crop estimates from two private firms are hanging over the market as well.

 

Commodity brokerage firm FCStone on Wednesday afternoon estimated U.S. corn production at 13.004 billion bushels, with a yield of 164 bushels per acre.

 

Although down slightly from the firm's October estimates of 13.064 billion bushels, with a yield of 163.3 bushels per acre, a 13 billion bushel crop is still regarded as bearish by analysts.

 

Informa Economics had issued crop estimates earlier Wednesday that were also seen as a bearish influence.

 

Demand has been weak recently since the market climbed to the US$4 area, but weekly export sales have rebounded a little.

 

The U.S. Department of Agriculture reported weekly next export sales of 571,200 metric tonnes, 564,000 of which was for the 2009-10 marketing year. Sales were above the previous week's total of 367,200, and at the high end of expectations. Analysts were expecting sales between 350,000 and 600,000.

 

The next upside price objective is to push and close prices above major 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 this week's low of US$3.59 1/4 a bushel.

 

First resistance for December corn is seen at US$3.90 and then at US$3.95. First support is seen at Wednesday's low of US$3.83 and then at US$3.80.