December 5, 2008
CBOT Corn Outlook on Friday: Down 4-6 cents on bearish economic picture
Chicago Board of Trade corn futures are expected to open lower Friday as the market continues to buckle under the weight of bearish outside markets and weak demand, analysts said.
Corn is called 4 to 6 cents lower, with follow-through selling from Thursday's losses. In overnight trading, December corn was down 4 3/4 cents to US$3.13 1/2, per bushel, March corn was down 4 1/2 to US$3.29 1/2 and May corn was down 6 1/4 cents to US$3.38 3/4.
Weak demand amid concerns about the deepening recession continues to pressure the market, analysts said. Friday's government report that 533,000 jobs were lost last month will add to the pressure on U.S. stocks, which will affect other markets, a trader said.
Corn has fallen along with crude oil to new lows this week. The two markets are tied together because of corn's role in ethanol, analysts say. Ethanol demand is expected to continue to weaken, analysts said.
On Thursday, the U.S. Department of Agriculture reported sales for the 2008-09 marketing year totaled 387,000 metric tonnes, down 17% from the prior week and 10% below the prior four-week average. Mexico's purchase of 575,000 metric tonnes of U.S. corn this week has failed to stop the market's descent.
Heavy deliveries are also bearish Friday, analysts said, with 1,498 deliveries reported against the December contract.
Analysts said corn needs outside markets to stabilize in order to stem its own decline. Farm Futures said in a morning commentary that although "outright liquidation slowed a little yesterday," open interest lost 5,474 contracts.
Market bulls are hoping to find support from weather in South America, Jon Michalscheck, analyst for Benson Quinn Commodities, said in a market commentary.
DTN Meteorlogix calls for scattered showers and thunderstorms Tuesday and Wednesday of next week, which would maintain favorable conditions for planting and developing corn.
The next downside price objective for the bears is to push and close March prices below solid technical support at US$3.25, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at US$3.50.
Farm Futures said the market's plunge has opened the door to a test of the US$3.25 level, and noted the 2007 nearby low is at US$3.08 1/2.