CBOT Corn Outlook on Monday: Up 5 -7 cents on worries about Argentina crop

 

 

Corn is called 5 to 7 cents higher. In overnight trading, March corn was up 7 3/4 cents to US$3.98 1/4 a bushel, May corn was up 6 1/2 cents to US$4.08 and July corn was up 7 cents to US$4.19.

 

Parts of Argentina saw rainfall over the weekend, but not enough to wash away mounting concerns about one of the nation's driest periods in decades.

 

"The weekend rainfall will provide some immediate relief, but at the same time, you have to wonder how much damage has already taken place," said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

The crop is in a critical growing stage, and the Buenos Aires Cereals Exchange said in its weekly crop report Friday that significant rainfall is needed soon in Argentina to prevent even more drastic crop losses. Many parts of the country's farm belt have seen the lowest precipitation in 47 years, according to the exchange.

 

The forecast does not look favorable, according to DTN/Meteorlogix, with mostly dry conditions expected through Friday.

 

Stronger soybeans, which have also climbed on the South American weather, are also supportive to corn. McCambridge said corn "can't let soybeans get too far away" because it would make producers more inclined to plant soybeans.

 

Although weekly export sales reported Friday were surprisingly strong, the market's upside potential is limited by the weak economy, which should keep demand in check, analysts said. Any strong rally in the market will leave corn vulnerable to increased competition from feed wheat, analysts said.

 

The next downside price objective is to push and close prices below solid technical support at US$3.75 a bushel. The next upside price objective is to push and close prices above major psychological resistance at US$4.

 

First resistance for March corn is seen at US$4 and then at last week's high of US$4.07. First support is seen at US$3.90 and then at US$3.85.

 

Speculative funds added 5,526 contracts to their CBOT corn long positions and cut 1,672 contracts from their short positions, putting them net short 17,112 contracts, the U.S. Commodity Futures Trading Commission said.

 

The supplemental commitment of traders report also showed that commercial funds cut 10,443 contracts from their long positions and 9,459 contracts from their short positions, putting them net short 133,009 contracts. Index funds cut 2,551 contracts from their long positions and added 3,247 contracts to their short positions, putting them net long 226,843 contracts, the CFTC said.