December 18, 2009

 

CBOT Corn Outlook on Friday: Up 2-4 cents; modest rebound, light trade

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents higher Friday as the market rebounds following Thursday's sharp drop.

 

In overnight trade, March corn was up 3 cents to US$4.00 per bushel and May corn was up 2 1/2 cents to US$4.10 1/4.

 

A stronger dollar was the main driver of double-digit losses Thursday, and although it is slightly higher Friday morning, traders say it appears to be a limited factor.

 

The market's slide has put it in a "ominous" situation technically, an analyst said. The March contract dropped to or below a slew of key moving averages Thursday, including the 10-day, 20-day, 50-day and 200-day averages. A solid rebound Friday would bring them back above those averages.

 

Analysts say the market still appears rangebound despite Thursday's losses, with solid support expected around US$3.80. Traders say that demand will pick up if prices approach that level.

 

This week has featured thin, low-volume holiday trade which will likely continue into next week and through the end of the year, analysts say.

 

While the market could see big price swings because of the thin trade, fundamentals tend to take a back seat in such a market, said Joe Victor, vice president/marketing for Allendale. The weeks of Christmas and New Year's Day are particularly tough, he said.

 

"These are two of the weeks I dread the most, because there's just nothing that will stimulate these markets," Victor said.

 

Analysts note that export demand has shown signs of picking up recently, and some viewed Thursday's marketing year high for weekly exports to be a good sign. But overall, the demand picture is still seen as weak.

 

The bulls' next upside price objective is to push and close prices above strong technical resistance at this week's high of US$4.13 3/4 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 US$3.90 a bushel.

 

First resistance for March corn is seen at US$4.00 and then at US$4.05, the technical analyst said. First support is seen at Thursday's low of US$3.93 1/4 and then at US$3.90.