December 17, 2009

 

CBOT Corn Outlook on Thursday: Lower on dollar; exports limit downside

 

 

A stronger dollar is expected to put Chicago Board of Trade corn futures on the defensive in early trade Thursday, although losses could be limited by strong weekly export sales.

 

Corn is called 3 to 5 cents lower. In overnight trade, March corn was down 5 cents to US$4.05 1/4 per bushel and May corn was down 5 1/4 cents to US$4.15 3/4.

 

After a late surge of fund-buying pushed prices higher on Wednesday's close, a stronger dollar, which emerged after the Federal Reserve Board meeting announcement, went to work on corn and other commodities, sending them lower.

 

Although traders say that grains and oilseeds have at times divorced themselves from the dollar recently, the greenback's strength will be a dominant story early Thursday. The dollar index has surged to a three-month high.

 

A trader said that the market is mainly being driven by technical trends and money flow.

 

The market got some supportive news from the U.S. Department of Agriculture Thursday morning, which reported weekly net export sales of 1.227 million metric tonnes, a marketing year high. The sales beat expectations of 500,000 to 900,000 tonnes and were above the prior week's total of 847,700 tonnes.

 

"That could lessen the blow a little bit," a floor analyst said.

 

Another trader said he's not reading too much into signs of life in the export market, however. He noted that a lot of the sales in the weekly report would have been booked at the middle of last week, when prices were down around US$3.80, which appears to be a target price for end-users to make purchases.

 

"I would beg to differ that they're doing the same at US$4.10," he said.

 

Prices are still in a choppy trading range at higher price levels, bound by solid support at the November low of US$3.72 1/2 and by solid resistance at the November high of US$4.25, a technical analyst said.

 

Bulls have the overall near-term technical advantage. Bulls' next upside price objective is to push and close prices above strong technical resistance at the November high of US$4.25 a bushel. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.90 a bushel, the technical analyst said.

 

First resistance for March corn is seen at Wednesday's high of US$4.13 3/4 and then at US$4.15. First support is seen at US$4.05 and then at Wednesday's low of US$4.03 1/4.