November 11, 2005

 

CBOT Corn Outlook on Friday: Narrowly mixed on overnight, spillover

 

 

Traders and analysts see corn futures at the Chicago Board of Trade opening mixed Friday on a mostly steady overnight trade and possible spillover from expected modest gains in soybeans, sources said.

 

"I think we'll see corn on both sides of the trade today, but I think we'll close higher," said Jason Roose, analyst at U.S. Commodities in West Des Moines, Iowa.

 

The corn market is bereft of fresh news, and traders are left with the lingering taste of the U.S. Department of Agriculture's November report, in which it estimated the U.S. crop at 11.032 billion bushels, up from 10.857 billion in October.

 

The USDA also bumped up ending stocks to 2.319 billion bushels, from 2.22 billion in October.

 

Now that the harvest has essentially wrapped up in many areas, the market's focus has shifted to demand. But the news there hasn't been much better. Weekly export sales Thursday were at the low end of trade estimates and sources said the market will need to see sales pick up markedly if they are to meet the USDA's 2 billion-bushel projection in 2005-06.

 

"We need something to change our demand. The cure for cheap prices is cheap prices," Roose said.

 

Corn basis is improving on the Mississippi River as well as the interior, however, a sign the market is improving and at least the cash market may have seen its lows. Plummeting barge freight rates have firmed up corn basis, Roose noted.

 

Meanwhile, the Midwest will see dry conditions mixed with scattered showers and thunderstorms over the weekend, as farmers attempt to put the finishing touches on the harvest.

 

In the western belt, dry conditions are seen Friday, with scattered showers and thunderstorms developing Saturday. Dry conditions will return Sunday and Monday, private weather forecaster DTN Meteorlogix said.

 

The eastern belt will see dry weather into Saturday, as scattered light showers develop late Saturday into Sunday, with dry conditions returning Monday.

 

Technically, December corn finds first resistance at Thursday's $1.94 3/4 high, then this week's $1.96 1/4 high. First support is seen at the $1.93 1/2 contract low, then $1.92, analyst Jim Wyckoff noted.

 

"The fact that the market did not react much to the bearish report strongly suggests that virtually all of the bearish news has been factored into the corn futures market and that a low is likely close at hand. But bears are still in full technical control," Wyckoff noted.

 

It will take a close back above the psychological $2.00 level to bolster bulls' confidence that a major low is in place, he added.