November 28, 2008


CBOT Corn Outlook on Friday: Down on outside markets; two-sided trade seen



Chicago Board of Trade corn futures are expected to open lower Friday following overnight losses amid pressure from outside markets, analysts said.


In overnight trading, December corn was down 4 cents to US$3.50 per bushel, March corn was down 4 3/4 cents to US$3.66 1/4, and May corn was down 4 3/4 cents to US$3.77 1/2.


A stronger dollar and weaker crude oil weighed on corn overnight, and could continue to do so in early trade Friday, analysts said.


"If crude comes back, you might have two-sided trade," said Jason Roose, analyst for U.S. Commodities in West Des Moines, Iowa.


Roose added that heavy deliveries would weigh on the market. Deliveries were heavy on first notice day as expected, with 1,900 deliveries reported against the December contract. Trade estimates ranged from 500 to 3,000.


There is plenty of supply and weak demand, as export demand remains low and corn faces stiff competition from feed wheat, analysts said.


Export sales were reported at 465,400 metric tonnes, within analyst expectations, which ranged from 250,000 to 600,000 metric tonnes.


Trade is expected to be thin Friday following the Thanksgiving holiday. That could allow for price swings, traders and analysts said, although the market has traded in a tight range all week and is likely to continue doing so.


"The range-bound trade does little to argue for a seasonal low, especially since open interest continues to trend lower," Farm Futures said in a morning commentary.


Weather should be favorable for producers still finishing up harvest on Friday and Saturday, DTN Meteorlogix said, although there could be rain and snow in the eastern U.S. corn belt on Sunday. Roose added that the market is eyeing weather in South America for any impact on the crop there.


Because of the holiday week, the market closes early Friday, at 1 p.m. EST rather than 2:15 p.m.


The next downside price objective is to push and close March prices below solid technical support at last week's contract low of US$3.52 1/4 per bushel, 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 March corn is seen at Wednesday's high of US$3.75 and then at this week's high of US$3.77 3/4, the technical analyst said. First support is seen at Wednesday's low of US$3.67 and then at US$3.63 1/2.


In other export news, a Malaysia-based company has bought 6,000 metric tonnes of corn from India at US$210/tonne, basis cost and freight for delivery early next month, a trading executive said Friday.

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