October 17, 2008

 

CBOT Corn Outlook on Friday: Up 2-4 cents; equities focus of attention

 

 

Chicago Board of Trade corn futures are expected to rebound Monday on signals from outside markets, analysts and traders said.

 

Corn is called 2-4 cents higher, but the outlook is tentative as the U.S. stock market gives back about half of Thursday's 400-point rally.

 

In overnight trading, December corn was 4 3/4 cents higher at US$3.89 3/4. March corn gained 4 1/2 cents a bushel, closing at US$4.06.

 

Deleveraging and liquidation pressures are meeting end-user demand, analysts and floor traders said.

 

"Bottom-pickers emerged to stabilize the market, suggesting that both the financial and commodity markets may be trying to build a base," said Arlan Suderman, market analyst for Farm Futures.

 

"End users see current prices as a good value and are beginning to step up to the plate" he said.

 

"As such, we're beginning to see a change in ownership from the funds to the end user that is healthy in the long run and suggests possible bottoming. Ultimately though, the commodity markets are only as healthy as the financial markets and that's dependent on investor confidence being restored.

 

"There are early signs of thawing in the credit markets, but it will take some time for investors to get over their fears," he added. "That should keep things volatile for awhile longer, with wide swings in both the financial and commodity markets."

 

Market bears will be push to close the day's trade below Thursday's low of US$3.71 with first support seen at US$3.80, a technical 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," the analyst said. "Also, Thursday's high-range close does suggest the bears have become exhausted at lower price levels."

 

In trying to revive the corn contract from 18-month-low territory, bulls will be trying to close above the US$4 psychological resistance level, the analyst said. First resistance on the nearby corn contract is seen at US$3.91 3/4.

 

"The US$3.98-US$4 area is a big break down point and should provide decent resistance," said a CBOT floor trader.

 

DTN Meteorlogix forecasts call for mostly dry weather aside from light showers in the northwestern portion of the corn belt.

 

Temperatures should remain mild, topping out in the high 60s and 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 as farmers wait for corn to dry down, Meteorlogix said.
   

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