October 2, 2008


CBOT Corn Outlook on Thursday: Down 1-2 cents on outside markets; choppy trade



Chicago Board of Trade corn futures are expected to open slightly lower Thursday following the overnight trend on outside market influences, analysts said.


Corn is called 1-to-2 cents lower. In overnight trading, December corn was flat at US$4.84 per bushel. March corn was down 1 cent to US$5.02 and May corn was down 1/4 cents to US$5.14 3/4.


A sharply higher dollar and lower crude oil are expected to pressure the market at the open, and the market will be vulnerable to outside "distractions," in a choppy trading day, an analyst said.


Although it passed the U.S. Senate Wednesday, the government's planned bailout of the financial sector still must clear the House, which has already rejected it once. Shawn McCambridge, senior grains analyst for Prudential-Bache, said the equities and commodities markets will remain very sensitive to any news indicating that the House may reject it again.


"Everyone remembers the meltdown from Monday when the House failed to pass this package," McCamrbidge said.


"Any trouble will favor downside potential," McCambridge added.


Corn fundamentals continue to play a minor role, many analysts said, although traders said an updated crop estimate by a private firm Wednesday afternoon could provide support to the market.


Commodity risk management firm FC Stone on Wednesday estimated the 2008-09 marketing year corn crop at 12.026 billion bushels, with a yield of 151.7 bushels per acre.


That's down from FC Stone's September projection of 12.159 billion bushels, with a yield of 153.4 bushels per acre, and lower than the U.S. Department of Agriculture's September estimate of 12.072 billion bushels, with a yield of 152.3 bushels per acre.


The USDA will release updated estimates Oct. 10 at 8:30 a.m., EDT.


Clear weather is favorable for the harvest, analysts said, and a lack of a significant frost threat continues to bode well for the maturing crop.


After falling sharply this week, the market is oversold and could find technical support to temper aggressive selling, McCambridge said.


Net export sales were reported at 568,500 metric tonnes, within analyst estimates of between 350,000 and 700,000 metric tonnes.


The next downside price objective is to push and close December prices below solid technical support at US$4.50, a technical analyst said. The next upside price objective is to push and close prices above resistance at the August low of US$5.04 1/2.


First resistance for December corn is seen at US$4.90 and then at Wednesday's high of US$5.00. First support is seen at Wednesday's low of US$4.82 3/4 and then at US$4.75.

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