December 31, 2009

 

CBOT Corn Outlook on Thursday: Up 2-3 cents on weaker dollar, solid exports

 

 

Chicago Board of Trade corn futures are expected to open higher Thursday on a weaker dollar amid year-end positioning, traders said.

 

Corn is called 2 to 3 cents higher. In overnight trade, March corn was up 2 3/4 cents to US$4.16 1.2 per bushel and May corn was up 2 3/4 cents to US$4.26 1.4.

 

The soft dollar is expected to give a boost to corn and commodities generally, analysts said. But trade will be thin on the last day of 2009, which could lead to choppy price action.

 

The market will be open its regular hours on Thursday, closing at 2:15 p.m. EST. The market will be closed Friday for the New Year's Day holiday, and electronic trade will resume Sunday evening.

 

Analysts say that year-end positioning will be a key feature of Thursday's trade. There is little significant news to move the market, although weekly export sales announced Thursday were considered solid.

 

The U.S. Department of Agriculture said that weekly net sales totaled 772,500 metric tonnes, down 52% from last week's marketing year high but within trade expectations for 500,000 to 900,000 tonnes.

 

Terry Reilly, analyst for Citigroup, added that a colder long-range weather forecast for the Midwest is supportive, as it would likely mean that shivering livestock have to consume more feed.

 

In other news, planting of Argentina's 2009-10 corn crop is advancing as farmers take advantage of recent rainfall, raising expectations of more area going to the crop, the Buenos Aires Cereals Exchange said in its weekly crop report Wednesday.

 

The exchange raised its forecast for planted area to two million hectares from a previous estimate of 1.95 million as rains helped with the planting of fields and in the development of the crop.

 

If the favorable weather conditions continue, the exchange estimates production from the 2009-10 season could come in at 15.8 million metric tonnes, up 15% from the 13.8 million tonnes in the 2008-09 season.

 

Technically, if March extends this week's rally, the reaction high crossing at US$4.24 1/2 is the next upside target, technical analyst Jim Wyckoff said. Closes above US$4.24 1/2 or below US$3.77 1/2 are needed to confirm a trading-range breakout and point the direction of the next trending move.

 

First resistance is Monday's high of US$4.18 1/2. Second resistance is the reaction high crossing at US$4.21, Wyckoff said. First support is the 10-day moving average crossing at US$4.06 3/4, and second support is the 20-day moving average crossing at US$4.01 1/4.