November 14, 2008

 

CBOT Corn Outlook on Friday: Up 2-4 cents on overnight gains, short-covering

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Friday following overnight gains, with short-covering expected ahead of the weekend.

 

Corn is called 2 to 4 cents higher. In overnight trading, December corn was up 3 1/2 cents to US$3.80 1/2 per bushel and March corn was up 3 1/2 cents to US$3.97.

 

Follow-through buying is expected, as U.S. stocks shot higher after the grains markets closed on Thursday. But corn gave back some of its initial gains in overnight trading, and outside markets are mixed Friday, a trader noted.

 

The market is oversold, traders said, and due for a bounce. The market's ability to stay above the new seasonal low of US$3.60 1/4 set Tuesday offers encouragement for bulls, traders said.

 

But interest from buyers remains weak, analysts said, and recent rallies have been brief and tepid.

 

Net export sales for the week ended Nov. 6 were reported at 357,800 metric tonnes, down from 471,300 the prior week. Sales were at the low end of trade expectations, as analysts estimated sales between 350,000 and 700,000 metric tonnes.

 

Corn remains married to outside markets, a situation that has frustrated some in the trade who feel the market is ignoring its own fundamentals.

 

"I sense increasing frustration in phone calls, because of the market continuing to go lower on outside forces; be patient, though," Risk Management Commodities senior analyst Mike Zuzolo said in a market commentary. "You can tell we are on the right track because of the strength in wheat and also because of the basis improvement we've been seeing in both corn and beans."

 

A trader added that a severe drought in Argentina is hindering planting and should be supportive, although the market doesn't seem to be paying much attention to the situation.

 

Although wet weather has continued to hinder the harvest, conditions should slowly improve in the U.S. Midwest as a drier pattern emerges next week, according to weather service DTN Meteorlogix.

 

The next downside price objective is to push and close December prices below solid technical support at this week's low of US$3.60 1/4, a technical analyst said. The next upside price objective is to push and close prices above psychological resistance at US$4.00.

 

First resistance for December corn is seen at US$3.84 and then at this week's high of US$3.89 1/2, the technical analyst said. First support is seen at US$3.70 and then at US$3.63 1/4.