July 25, 2008


CBOT Corn Outlook on Friday: Slightly higher; choppy trade expected



Chicago Board of Trade corn futures are expected to open slightly higher Friday on a technical bounce and signs that lower prices are attracting more demand, analysts said.


Corn is called 1 to 2 cents higher. In overnight trading, September corn was up 2 cents to US$5.75 per bushel, December corn was up 1 1/4 cents to US$5.93 1/4 and March corn was up 2 1/2 cents to US$6.13 3/4.


Although the market has shown signs of stabilizing after steep losses this month, analysts do not expect a significant rally Friday because of bearish weather.


"It's probably headed nowhere," said Brian Hoops, president of Midwest Market Solutions. "We're probably looking at choppy, two-sided trade."


The market has dropped this month amid favorable U.S. corn belt weather and commodity liquidation. Prices have dropped more than US$2.00 a bushel for the largest four-week sell-off in the history of corn futures trading, a technical analyst said.


"It's badly oversold," said Hoops. "We're probably due to have more of a technical bounce."


With the substantial drop in prices since late June, the market is now gearing up to attract demand once again, an analyst said. Prices closed higher Thursday for the first time in six days.


"It seems that we've hit a level where buyers and users are most likely comfortable extending their pricing," an analyst said. "That's been able to offset the long liquidation that we've been seeing."


The analyst added that the market is also likely to see additional short-covering headed into the weekend. The weather forecast remains bearish. The DTN Meteorlogix forecast calls for scattered showers and thunderstorms in the corn belt Friday through Saturday with totals between 0.10 and 0.50 inches Friday and 0.25 and 1.00 inches Saturday. Episodes of scattered to widely scattered showers and thunderstorms are expected to continue through Tuesday.


Despite small gains Thursday, analysts said a drop in open interest indicates that funds are continuing to liquidate long positions.


The next upside price objective is to push and close December prices above solid technical resistance at US$6.00, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at this week's low of US$5.62 3/4.


First resistance for December corn is seen at US$6.00 and then at Thursday's high of US$6.03 1/4. First support is seen at Thursday's low of US$5.80 1/2 and then at US$5.75.

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