December 10, 2009

 

CBOT Corn Outlook on Thursday: Flat-down 1 cent as USDA meets expectations

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday as the U.S. Department of Agriculture, as expected, increased projected new crop carryout in its supply and demand report.

 

Corn is called steady to 1 cent lower. The Thursday morning report from the USDA was in line with most expectations, as it lowered demand and left production unchanged. It projected 2009-10 ending stocks at 1.675 billion bushels, up from the November estimate of 1.625 billion.

 

The trade on average was expecting ending stocks of 1.646 billion bushels. Seven of the 17 analysts surveyed correctly guessed the USDA estimate at 1.675 billion. Ending stocks for 2008-09 were 1.674 billion.

 

The market should open in line with overnight action, and could be a follower of wheat or soybeans, analysts said.

 

In overnight trading, December corn was down 3/4 cent to US$3.67 1/4 per bushel and March corn was down 1 cent to US$3.82 1/2.

 

The USDA also released export sales Thursday morning, with weekly net corn sales of 847,700 metric tonnes at the high end of trade expectations, which were between 450,000 and 900,000 metric tonnes. The weekly sales were up 29% from the previous week and 25% from the prior 4-week average.

 

A snowstorm and bitterly cold weather that has descended upon the Midwest this week is seen as underlying support, although Mike Zuzolo, president of Global Commodity Analytics and Consulting, said that so far basis--the difference between cash and futures prices--has not shown much movement as of yet.

 

"I think basis and spreads will be the best way for the trade to gauge whether the storm has had a positive impact on the corn or not," Zuzolo said.

 

Technical analyst Jim Wyckoff said the fact that corn could not rally Thursday despite the storm was a "bearish clue."

 

Bulls' next upside price objective is to push and close March prices above major psychological resistance at US$4.00 a bushel, Wyckoff 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$3.72 1/2 a bushel.

 

First resistance for March corn is seen at Wednesday's high of US$3.88 3/4 and then at this week's high of US$3.93 1/2, Wyckoff said. First support is seen at Wednesday's low of US$3.79 and then at US$3.75.