November 27, 2009

 

CBOT Corn Outlook on Friday: Down 8-10 cents amid global economic concerns

 

 

Chicago Board of Trade corn futures are expected to retreat Friday as new worries about the global economy bolster the dollar and weaken commodities, analysts said.

 

Corn is called 8 to 10 cents lower. In overnight trade, December corn was down 10 cents to US$3.82 per bushel and March corn was down 9 3/4 cents to US$3.98 1/4.

 

The abbreviated session will have a bearish tone due to debt problems that have emerged in Dubai that could have worldwide implications. Analysts say that is strengthening the dollar as investors flock to safe havens, which will weigh on commodities. Weaker crude oil in particular will weigh on corn.

 

Mike Zuzolo, president of Global Commodity Analytics and Consulting, added that weaker gold and wheat prices could pressure corn.

 

Zuzolo said the market is hovering around key technical support, including a trend line, the 200-day moving average and the 200-week moving average. A dip below the overnight low of US$3.79 in the December contract could spark a wave of technical selling by funds, he said.

 

Amid the bearish outside influences, the market did get one bullish surprise Friday morning: Weekly export sales were much higher than expected.

 

The U.S. Department of Agriculture reported weekly net sales of 1.63 million metric tonnes, up sharply from previous weeks. The sales included 1.22 million for 2009-10, a marketing year high, and 402,900 for 2010-11.

 

The trade was only expecting sales of between 400,000 and 775,000 metric tonnes.

 

Mexico was the key buyer, followed by Japan and South Korea.

 

But Zuzolo said that the market has climbed recently on technical strength despite poor export sales, and that conversely a rebound in sales might not rally the market if technical charts look bearish.

 

"I don't know if that's going to matter today or not," he said of the sales.

 

Fundamentals are taking back seat Friday, but the trade is keeping an eye on the weather and its effect on the slow harvest. DTN Meteorlogix said in a forecast that "except for the Ohio River valley and the lower (Mississippi River) valley the weather pattern looks open for harvesting for at least the next 6-7 days."

 

The market closes early Friday, at 1 p.m. EST.