December 19, 2008


CBOT Corn Outlook on Friday: Down 9-11 cents on bearish outside markets



Chicago Board of Trade corn futures are expected to open lower Friday on bearish outside markets, including lower crude oil and a higher dollar, analysts said.


Corn is called 9 to 11 cents lower. In overnight trading, March corn ended down 11 cents to US$3.78 1/2 per bushel, May corn ended down 13 1/4 cents to US$3.87 and July corn ended down 12 1/2 cents to US$3.98 1/4.


Outside markets will set the tone, traders and analysts said. The dollar is stronger, which makes U.S. exports less attractive, and crude oil continues its plunge, having dipped below US$34 in morning trading.


"It's crude oil. There's no other way to explain it," Joe Victor, analyst for Allendale, said of corn's weakness.


Crude's drop is bad news for one of corn's biggest consumers, ethanol, which Victor said was 58 cents higher than gasoline, he added.


Volume should begin to dip heading into the Christmas holiday next week, traders and analysts said.


"Low volume and lack of data into the holiday could make for erratic trading, with the stock market fueled today by expiration of futures and options," Farm Futures said in a morning commentary. "A big storm pounding Chicago today could cause some traders to just bag it and start their holiday's early."


The market had appeared to be settling in a range between US$3.80 and US$4 in the March contract, but a dip below that mark would signal technical weakness and possibly trigger more selling, analysts said.


Weak demand is weighing on the market, with lackluster export sales reported Thursday. Victor said that even a weaker dollar would not "reignite" export sales at this point in the season.


The market will look to South American weather for support, analysts said. There are concerns about continued dryness in Argentina and Brazil, particularly in southern Brazil, where much of the crop is pollinating.


The next downside price objective is to push and close March prices below solid technical support at this week's low of US$3.70 1/4 per bushel, a technical analyst said. The bulls' next upside price objective is to push and close prices above solid technical resistance at of US$4.16 3/4.

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