January 11, 2010

 

CBOT Corn Outlook on Monday: Up 1-2 cents on index funds, weak dollar

 

 

Chicago Board of Trade corn futures are expected to open higher Monday amid support from a weaker dollar and index fund rebalancing.

 

Corn is called 1 to 2 cents higher. In overnight trade, March corn was up 1 1/2 cents to US$4.24 1/2 per bushel and May corn was up 1 1/4 cents to US$4.34 1/2.

 

A weaker dollar and stronger equities supported corn and other commodities overnight, and should continue to do so early Monday, traders said. Bulls are looking to extend Friday's rally, which was aided by index fund rebalancing late in the session.

That rebalancing is expected to continue for the next four days, and should "make sellers less aggressive" throughout the session, a trader said.

 

Traders said there will be positioning ahead of Tuesday's key reports from the U.S. Department of Agriculture on production and stocks. There's little fundamental news in the market, which some say has no fundamental reason to be trading as high as US$4.25.

 

"We'll see what this market's made of after tomorrow's report," a floor analyst said.

 

Analysts are mostly expecting Tuesday's reports to be supportive, with a lower 2009 crop estimate and reduced ending stocks projection.

 

The next upside price objective is to push and close prices above strong technical resistance at last week's high of US$4.26 1/4 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below major psychological support at US$4.00 a bushel.

 

First resistance for March corn is seen at Friday's high of US$4.23 3/4 and then at US$4.26 1/4, the technical analyst said. First support is seen at US$4.20 and then at Friday's low of US$4.15.

 

Managed Money accounts piled on long positions in CBOT corn in the week ended Jan. 5, the CFTC said in its disaggregated commitments of traders report Friday.

 

The report showed managed money added 23,256 contracts to their long positions, for a total of 257,495 and cut 574 contracts from their short positions, for a total of 28,238. The March contract gained 1 3/4 cents during that time period.

 

Meanwhile, the supplemental commitments of traders report showed that traditional speculative funds added 27,155 contracts to their long positions and cut 185 contracts from their short positions, leaving them net long 183,136 contracts--the biggest longest position since June 2008, a trader said.

 

In other news, Argentina's farmers are capitalizing on improved soil moisture to continue corn planting, with 89% of the 2009-10 crop sown, the Agriculture Ministry said in a weekly report Friday, listing conditions as of Thursday.

 

In the important corn area of Marcos Juarez in the central province of Cordoba, rain last month was good for the crop and the plants are now in an "excellent state," the ministry said.

 

Also, China's corn exports in December fell 4.7% from the same month a year earlier to 36,243 metric tonnes, according to preliminary data issued by the General Administration of Customs Sunday.

 

Total corn exports last year fell 52.6% on year to 129,584 tonnes, the customs administration said.