October 16, 2008

 

CBOT Corn Outlook on Thursday: Mixed on outside markets and crude direction

 

 

Chicago Board of Trade corn futures are expected to follow equities and crude oil on Thursday, which at this point offer uncertain direction.

 

Corn is called mixed, as U.S. stocks appear to be finding strength after slipping overnight. Crude oil and the U.S. dollar are lower, but in constant fluctuation.

 

In overnight trading, December corn lost 1 cent to close at US$3.87 per bushel and March corn dropped 3 1/4 cents to US$4.02 1/4.

 

Correcting stocks portend "a little less severe opening," a CBOT floor trader said.

 

Early calls predicted corn would drop 2-4 cents on the open, but U.S. stocks were down at the time.

 

"Credit spreads have narrowed, which provides a little optimism this morning," the trader said.

 

Corn futures found some support around US$3.76, "but don't appear to have much reason to move higher, especially with harvest hedge pressure looming, unless outside markets settle down," said Bryce Knorr, Farm Futures senior editor. "That, unfortunately, doesn't look likely."

 

Fund liquidation is continuing, with an estimated 8,000 corn contracts sold as of the last report Wednesday.

 

"Corn continues to bleed open interest, with that figure down another 12,410 contracts on Wednesday's slump, with funds still being forced to liquidate positions as losses mount and loans come due," Knorr added. "Volume did pick up a little, however."

 

Market bears will be gunning to finish the day's trade below the solid technical support level of US$3.75 with first support seen at US$3.84 3/4, a technical analyst said.

 

"In the past two weeks prices have dropped below major psychological support levels of US$5.00 and now US$4.00," the analyst said. "There are no technical clues of a market bottom being close at hand, but seasonal studies do show corn prices bottoming out during this timeframe."

 

Bulls will be trying to close above the US$4 psychological resistance level.

 

DTN Meteorlogix forecast calls for mostly dry weather aside from a few lingering showers in the east and southeastern areas of the corn belt.

 

Temperatures should generally hover in the normal-to-above-normal range, not dipping below 34 degrees Fahrenheit, the private weather forecasting firm said.

 

Despite some rain-related harvest delays in the west, the weather has been generally favorable for harvest in the east, Meteorlogix said.

 

In other news, the European Union is set to restore import duties on cereals.