November 12, 2009

 

CBOT Corn Outlook on Tuesday: Down 6-8 cents on harvest pressure, firm dollar

 

 

Chicago Board of Trade corn futures are expected to open lower Thursday amid harvest progress and strength in the dollar.

 

Corn is called 6 to 8 cents lower. In overnight trade, December corn was down 8 cents to US$3.86 per bushel and March corn was down 8 1/4 cents to US$4.01.

 

The market is in retreat after early gains to start the week in a pattern that resembles last week's price action. Outside markets, including a stronger dollar and weaker crude oil, are pointing corn and other commodities lower Thursday, analysts said.

 

As was the case last week, an open, dry weather pattern that is allowing for harvest progress is "capping rallies" toward the end of the week, said Don Roose, president of U.S. Commodities.

 

But analysts also noted some uncertainty in the forecast for next week, which could end the favorable harvest weather temporarily.

 

"The rain potential for early next week looks heavier today than it did yesterday," DTN Meteorlogix said in a forecast.

 

The improved harvest pace is putting more corn into the supply pipeline. Traders add that farmers are willing sellers as the market gets above US$4, which the December contract rallied above Wednesday before retreating.

 

"We have a hard time on the demand front. As we move higher, the market gets more concerned about export demand," Roose said. "Four dollars is a limiting factor, no doubt."

 

Outside money flow remains a key factor in the market, analysts said. A couple of market participants have noted that index fund rebalancing that will happen in early January is giving background support to the market, although it is not catalyst for a rally in itself.

 

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 the November low of US$3.59 1/4 a bushel.

 

First resistance for December corn is seen at US$3.97 and then at US$4.00. First support is seen at US$3.90 and then at US$3.85.

 

In international news, European Union cereal plantings for harvest in 2010 are expected to fall 1.8% on the year to 56.97 million hectares, Strategie Grains said in its monthly report published Thursday.

 

The fall is mainly due to farmers to leaving more land fallow as a result of lower margins, said the report. Corn plantings are expected to fall 2% on the year to 8.33 million hectares.