November 6, 2008
CBOT Corn Outlook on Thursday: Down 3-5 cents on overnight decline, firm dollar
U.S. corn futures are expected to open 3-5 cents a bushel lower on follow-through selling from overnight losses, a firm U.S. dollar versus the world's major currencies and an expected lower open on Wall Street.
December corn futures on the Chicago Board of Trade lost 3 1/4 cents to end at US$3.87, and March fell 4 1/2 cents to US$4.03 1/2 a bushel.
December crude oil futures are down 3% at the open, which will likely encourage speculative selling among commodities. Equity indexes are also trading south of unchanged ahead of the open, which will keep fears of the slowing economy on the front burner.
Concerns over slowing demand also continue to pressure the market, as global economies slow and slink toward recession.
"I think we're getting comfortable with the supply, but the fear is, 'How strong is the global demand base?'" said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
If the global economic slowdown continues as the dollar strengthens, "that's a little bit negative on export sales," he said.
Corn export sales for the week ended Oct. 30 were a net 471,300 metric tonnes, at the low end of trade estimates looking for 400,000 to 700,000 tonnes. Sales were up 14% from the previous week but were down 40% from the previous four-week average, the U.S. Agriculture Department said.
Export shipments improved 3% from last week and were reported at 618,300 tonnes, though they were still down 20% from the prior four-week average. Mexico was the top destination at 179,600 tonnes, Colombia was next with 112,000 tonnes and South Korea took 103,900 tonnes.
Technically, every time the market attempts to rally it meets stiff resistance and prices retreat, said Roose.
"The market just can't mature to a price where it can sustain rallies and it falls right back into the range," he said.
Weather conditions are taking a turn for the worse in the western and central Midwest, as a large storm system turns over the Dakotas, Nebraska, Iowa and Illinois. The western Dakotas are seeing blizzard conditions, but snow is expected to be confined to the Dakotas, parts of Minnesota and could affect parts of northern Iowa and eastern Nebraska, DTN Meteorlogix said.
Other areas of the Midwest will see scattered showers, bringing from 0.10-0.60 inch totals over the next day or two. Temperatures will fall to below normal after the weather system moves out.
In other news, the United Nation's Food and Agricultural Organization said global corn production would reach 798 million metric tonnes in 2008, up nearly 2% from last year. It warned, however, that the current financial crisis will negatively affect agricultural sectors in many countries, including those in the developing world.
The U.S. is expected to supply Pakistan with US$200 million of feed wheat, Reuters reported, citing an unidentified food ministry official.