December 3, 2009

 

CBOT Corn Outlook on Thursday: Up on follow-through, outside markets

 

 

Bullish signals from outside markets and follow-through buying from the overnight trading session are expected to lift Chicago Board of Trade corn futures 2 to 4 cents per bushel higher early Thursday.

 

In overnight electronic trading, CBOT March corn rose 3 1/4 cents to US$4.09 3/4.

 

Weakness in the U.S. dollar and gains in crude oil and gold should help boost CBOT grains, analysts said. The grains watch the dollar because a weak greenback makes U.S. grain more attractive to foreign buyers.

 

"We are watching the outside markets considerably," said Arlan Suderman, analyst for Farm Futures. "The tone this morning is supportive."

 

Corn could run into some producer selling as the U.S. harvest continues, which may limit gains, traders said. Harvest was 79% complete as of Sunday, below the average of 97%, according to the U.S. Department of Agriculture.

 

March corn is testing technical support at US$4, Suderman said. Speculative selling should ease as the contract approaches that level, although there will still be producer selling, he said.

 

"I think we have to have strong outside money support until we reach that technical objective of US$4 or somewhat close to it," he said.

 

The USDA said weekly U.S. corn export sales were 659,000 tonnes, within trade expectations of 400,000 tonnes to 900,000 tonnes. The sales were down 46% from the previous week and unchanged from the prior four-week average, according to the USDA.

 

Traders described the export sales as "routine" and said they would not offer strong support. It is "tough" to justify corn above US$4 from a fundamental standpoint, Suderman said.

 

March corn on Wednesday closed lower and nearer the session low amid profit-taking and bearish signals from outside markets. The U.S. dollar was firmer Wednesday, while crude oil and U.S. stock index prices were lower.

 

No chart damage has occurred in corn, but bulls are fading and need to show fresh power soon, a technical analyst said. Bulls still have the overall near-term technical advantage, he said.

 

Bulls' next upside price objective is to push and close March corn above solid technical resistance at the November high of US$4.25, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.90 1/4, he said.

 

First resistance for March corn is seen at US$4.10 and then at Wednesday's high of US$4.13 3/4. First support is seen at Wednesday's low of US$4.04 1/2 and then at US$4.00.