September 5, 2008

 

CBOT Corn Outlook on Friday: Down 13-15 cents on outside, technical pressure

 

 

Chicago Board of Trade corn futures are expected to open lower Friday, with the market struggling to find support amid technical weakness and pressure from outside markets, analysts said.

 

Corn is called 13 to 15 cents lower. In overnight trading, September corn was down 14 1/4 cents to US$5.35 per bushel, December corn was down 14 cents to US$5.50 1/2 and March corn was down 13 1/2 cents to US$5.69 3/4.

 

Corn has little of its own fundamental news to counteract outside influences, which are the key driver of the market, analysts said.

 

"There's not much of a fundamental feature to grab on to," said Shawn McCambridge, senior grains analyst with Prudential-Bache in Chicago.

 

Concerns about the global economy, including weakness in the equities markets, has prompted concerns about dampening commodity demand, traders said. McCambridge added that with index funds, equities and commodities are "all kind of intertwined," making liquidation broad-based.

 

Technically, corn is "screaming for help," McCambridge said. Analysts said US$5.50 is key support for the December contract.

 

Ideas that the dollar has made a long-term bottom are bearish, analysts said. A stronger dollar makes U.S. exports less attractive.

 

Recent heavy rains from the remnants of Hurricane Gustav across much of the U.S. corn belt is good for the crop and has pressured prices, some analysts said.

 

DTN Meteorlogix said the heaviest rainfall in the corn belt Thursday was through Missouri, Illinois, and western Michigan, while eastern Indiana and Ohio will "miss out on this rain."

 

The forecast calls for cooler conditions continuing into next week, slowing the maturation of the crop, especially in the western corn belt. There is no significant threat of frost in the next seven days.

 

Net export sales were 589,600 metric tonnes for the week ended Aug. 28, in line with analyst expectations of between 400,000 and 800,000 metric tonnes. The prior week's sales were 846,800 metric tonnes.

 

There were 251 deliveries against the September contract reported Friday.

 

The trade is beginning to look ahead to the U.S. Department of Agriculture's crop production report, which will be released Sept. 12. A private firm is expected to release its own production estimates this morning.

 

The next upside price objective is to push and close December prices above solid technical resistance at US$5.80 3/4, which would fill on the upside a downside price gap on the daily bar chart, 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$5.50.

 

First resistance for December corn is seen at Thursday's high of US$5.72 3/4 and then at this week's high of US$5.77 1/4, the technical analyst said.