CBOT Corn Outlook on Friday: Up 2-3 cents in minor technical bounce

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Friday in a modest bounce on outside market support following sharp losses this week.

 

Corn is called 2 to 3 cents higher. In overnight trading, December corn ended up 3 1/4 cents to US$4.57 1/4 per bushel and March corn ended up 2 3/4 cents to US$4.75 3/4.

 

The market plunged Thursday amid "massive liquidation," a trader said. Corn has dropped 16.4% in the December contract this week, is oversold and due for a corrective bounce, according to analysts.

 

"I think today the trade might start to recover, but it's tough to see a catalyst for a strong recovery," a trader said.

 

The trade remains focused on the troubled state of the financial sector and credit markets, and is anticipating the U.S. House vote on the government's bailout package.

 

Some traders say another rejection by the House will pressure the markets further. Uncertainty about the bailout plan's fate helped push prices lower Thursday, traders said.

 

An approved bailout could be inflationary, some traders and analysts have said, although that prospect is considered less likely that it was a week ago, since the U.S. dollar has surged on concerns about the European economy.

 

Outside markets, which pressured corn and other commodities Thursday, appear to be less bearish Friday, traders said, with crude oil flat. The dollar continues to show strength, however, which makes U.S. exports less attractive.

 

The exchange-imposed daily trading limit will be an expanded 45 cents Friday, up from the standard 30-cent limit following Thursday's limit down fall.

 

Corn fundamentals remain a minor factor, most analysts said, although the potential for wet weather slowing harvest could offer minor support for the market, a trader said. Weak demand is weighing on the market, as are anecdotal early reports of stronger-than-expected yields in some areas, traders said.

 

Technically, the market is short-term oversold, and due for a corrective bounce, a technical analyst said.

 

The next downside price objective is to push and close prices below solid technical support at US$4.50, the 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$4.60 and then at US$4.70. First support is seen at Thursday's low of US$4.54 and then at US$4.50.