December 26, 2008

 

CBOT Corn Outlook on Friday: Up 2-4 cents, lifted by weaker dollar, soy

 

 

Chicago Board of Trade corn futures are expected to rise Friday with analysts looking to stronger crude oil and a weaker U.S. dollar to add support.

 

Corn is called 2-4 cents higher, after closing at a fresh five-week high Wednesday. Trading returns to its normal schedule Friday after a break Thursday for the Christmas holiday.

 

"Nearby corn approaching US$4.00 is hurting the feed, export and ethanol users," said analyst Carl Norden in his Country Hedging morning outlook. "But if weather concerns in South America persist, the need to ramp up U.S. acreage will trump the current demand argument."

 

"More rain is needed for developing corn through south-central Brazil," said a DTN Meteorlogix forecast Friday. "Some beneficial rains are possible during the next few days favoring northern or northeastern areas."

 

"Harvest is nearly complete across northeastern Brazil," DTN said. "Crop quality is down in some areas due to dry weather during the past few months."

 

Export sales of corn for the week ended Dec. 18. totaled 21.7 million bushels, according to a report released by the U.S. Department of Agriculture Friday. The report was delayed by a day due to the Christmas holiday.

 

Sales totaled 551,400 metric tonnes. Analysts predicted sales to range from 250,000-700,000 metric tonnes.

 

Corn bears "still have the overall near-term technical advantage" as prices are still trading below a 5.5-month-old downtrend on the daily bar chart, but a "weekly high close on Friday would provide the bulls with fresh upside near-term technical momentum," a market technician said.

 

Market bears are gunning to finish Friday's trade below solid technical resistance at last week's low of US$3.70 1/4 on March corn with first support at US$3.91 1/4 and then US$US$3.85, the technician said.

 

Bulls are aiming to close above solid technical resistance at US$4.02 3/4, the analyst said. First resistance on March contracts is seen at Wednesday's high of US$3.98 1/4.

 

Corn "will need to keep pace with the bean complex to ensure adequate acreage and that helps in explaining the recent run up in corn," said Jon Michalscheck of Benson Quinn Commodities.

 

But, he added, at this time of year with not much planting going on, corn rallies "could be a play on the final acreage that gets planted in areas of the Southern Hemisphere, but it makes more sense for it to be for technical reasons."

 

"It would make sense for the corn and bean complex to fight over acres during the month of February when the insurance rate is supposedly established, but not in December," Michalscheck said.