December 22, 2008


CBOT Corn Outlook on Friday: Up 2-4 cents on overnight move; light trade seen



Chicago Board of Trade corn futures are expected to open slightly higher Monday following overnight gains, although two-sided trade is expected as the market battles technical weakness.


Corn is called 2 to 4 cents higher. In overnight trading, March corn was up 2 cents to US$3.82 3/4, May corn was up 3 1/2 cents to US$3.94 1/2, and July corn climbed 4 cents to US$4.05 per bushel.


"We're starting to lose a lot of our technical support, and unless we were to have very strong outside support from the equities or into the metals and energies-type markets, I think we'll see a little bit of a corrective-type trade this week," said Shawn McCambridge, senior grains analyst for Prudential-Bache.


Trade is expected to be light this week due to the Christmas holiday Thursday, as some traders take the whole week off. That creates the potential for wilder price swings, although "a lot of people have positions set for the holidays," McCambridge said.


Demand is still an ongoing concern, "and putting a dollar on prices is not going to help that either," McCamrbidge said, referring to corn's recent rally.


Analysts noted that the USDA's cattle on feed estimate was only 94% of the prior year.


A weaker dollar and higher crude oil could offer support, analysts said.


In other news, China's government will buy another 20 million metric tonnes of corn in the near future to help boost sluggish domestic prices, industry participants said Monday.


The National Development and Reform Commission has decided to purchase this amount, and the order will be allocated to major producing areas soon, said Liu Zhaofu, general manager of Heilongjiang-based soybean consultancy Longma Consultation.


Analysts said this stockpiling is generally supportive for global prices.


Underlying support also is seen from the weather in South America. More rain is needed for developing corn through south-central Brazil, DTN Meteorlogix said, while crop quality in some areas in northeastern Brazil is down due to dry weather in recent months.


On Friday, the Buenos Aires Cereals Exchange projected Argentina's corn crop would be smaller than expected due to dryness.


The next downside price objective is to push and close March prices below solid technical support at last week's low of US$3.70 1/4, a technical analyst said. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$4.02 3/4.


First support for March corn is seen at Friday's low of US$3.75 1/2 and then at US$3.70 1/4. First resistance is seen at Friday's high of US$3.85 3/4 and then at last week's high of US$4.02 3/4.

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