November 21, 2008
CBOT Corn Outlook on Friday: Mixed; eyeing outside markets
Chicago Board of Trade corn futures have mixed calls for the start of Friday's day session, with positive signals from outside markets in early action offsetting some pressure from global economic unrest, analysts said.
Analysts expect corn to open 2 to 3 cents lower.
In overnight electronic trading, December corn was 4 3/4 cents lower at US$3.59, and March corn was 4 1/2 cents lower at US$3.75 1/2.
The lower overnight theme sets the stage for a lower opening, but with the U.S. dollar is lower, and crude oil and stock index futures higher, traders said a clear indication of direction is unclear.
Adding to the mixed tone in the market is favorable weather conditions for U.S. harvesting while dryness issues linger in Argentina plantings.
The influence of outside markets remains the dominant feature in the market place, and supportive outside markets may trigger short covering. "If the outside markets remains positive leading up the grain market opening, a steady to higher opening is likely," said Vic Lespinasse, analyst with Grainsanalyst.com.
Meanwhile, end of the week and pre-holiday positioning maybe featured with traders looking to roll positions ahead of next weeks first notice day for December futures, a CBOT floor analyst said.
A technical analyst said corn prices are still trading below a five-month-old downtrend line on the daily bar chart. The next downside price objective for March corn is to push and close prices below solid technical support at US$3.50. The next upside price objective is to push and close March corn prices above psychological resistance at US$4.00.
First resistance for March corn is seen at US$3.85 and then at Thursday's high of US$3.91 1/4. First support is seen at Thursday's contract low of US$3.76 1/2 and then at US$3.70.
The DTN Meteorlogix weather forecast said favorable harvest weather is on tap for the western U.S. Midwest region for at least another 5-7 days. No significant harvest concerns for the east during the 7 day period, despite some precipitation in the region during this time. Friday's outlook for next week continues to mention some promise of showers in Argentina but compared to yesterday this chance has diminished.
Meanwhile, despite agricultural commodity prices falling this year as part of the commodities complex amid global financial woes, corn and soybeans will outperform the general market in the coming year, said JPMorgan Chase & Co. (JPM) in its most recently released report.
While economic pressure is likely to leave the sector range bound into the first quarter of 2009, the investment bank expects realized or prospective supply pressure to support a price move to higher levels for the crops.
China may increase the corn stockpile in its state reserves by buying an additional volume of up to 5 million metric tonnes to support domestic prices, analysts said Friday.