September 18, 2008


CBOT Corn Outlook on Thursday: Up 3-5 cents on follow-through, outsides



Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Thursday on follow-through buying and support from outside markets, traders said.


December corn ended up 4 1/2 cents to US$5.58 1/2 and March corn ended up 5 1/2 cents to US$5.75 1/2 per bushel.


Corn will be strongly influenced by activity in outside markets, traders said. A drop in the U.S. dollar, along with a climb in gold and crude oil, should continue to provide support, although traders said there was limited upside potential due to weak demand.


"We'll have a better start," a trader said. "I'm not sure we've got the rationale to really get up and run."


Corn futures climbed about 20 cents Wednesday, as the market may have been "a little overextended" to the downside following earlier losses, a trader said. The market has underlying support from last week's U.S. Department of Agriculture crop production report, which cut projected yield, traders added. There are also ideas that the report overstated the size of the crop.


A trader said corn has appeared to be more resilient than soybeans lately, due to greater "worry about future revisions lower in yield."


Traders and analysts said in light of this week's troubles in the financial markets, analysts are searching for a place to put their money. Some have turned to commodities, traders said, on ideas that the troubles will prompt inflation. But there is a lot of uncertainty, traders said.


"If this pushes us deeper into global recession, I'm not sure that's inflationary," a trader said.


Weather forecasts are good for the crop, but not a strong factor in the market, traders said. DTN Meteorlogix calls for dry weather conditions through the U.S. corn belt through Monday. There is no immediate threat of a frost.


The U.S. Department of Agriculture reported net export sales of 303,800 metric tonnes for the 2008-09 and 2009-10 crop years. Analysts expected between 300,000 and 500,000 metric tonnes. Net export sales for the previous week were 376,300 metric tonnes.


Despite Wednesday's gains, prices are still in a four-week-old downtrend on the daily bar chart, a technical analyst said. The next upside price objective is to push and close prices above resistance at US$5.80 3/4, he said. The next downside price objective is to push and close prices below solid technical support at Wednesday's low of US$5.26.


First resistance for December corn is seen at Wednesday's high of US$5.60 and then at US$5.65. First support is seen at US$5.50 and then at US$5.45.

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