January 28, 2008

 

CBOT Corn Outlook on Monday: Down 3-5 cents on weak equity, outside markets

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 3 to 5 cents lower, pressured by weakness in overseas equity markets as well as lower "outside markets," analysts said.

 

In overnight electronic trading, March corn declined 4 1/4 cents to US$4.94 cents per bushel and December was down 4 3/4 cents to US$5.05. Electronic trading volume in March was above 10,000 contracts.

 

Corn should start out on the defensive, an analyst said. World equity markets were weaker overnight and the U.S. stock market looks to open lower, which weighs on overall investor sentiment, the analyst said. In addition, several "outside" commodity markets are weaker, which should also limit buying interest, the analyst added.

 

An expected stronger start in wheat futures might temper the downside, a trader said. Spring wheat futures were sharply higher in overnight trade, and if CBOT wheat rallies, it might mitigate the downside in corn, the trader said. However, there were good rains in Argentina over the weekend and the forecast is for additional precipitation Monday and Tuesday. Depending upon what happens in equities, it could be a choppy session, the trader said.

 

In Argentina, scattered showers and thunderstorms over the weekend are expected to be followed by scattered-to-widely scattered light showers Monday and Tuesday, DTN Meteorlogix Weather said. Drier weather with only a few light showers is possible in the north on Wednesday. Temperatures are expected to average below normal in the period, Meteorlogix Weather said.

 

On daily technical charts, March corn gapped open higher and closed at a bullish weekly high close, a technical analyst said. The bulls' next upside objective is to push and close prices above solid technical resistance at the contract high of US$5.19 per bushel. The next downside price objective is to push prices below solid support at US$4.89 1/2 which would fill on the downside last Friday's upside price gap on the daily bar chart, the analyst said.

 

First resistance for March corn is seen at US$5.00, and then at US$5.04 1/2, Friday's high. First support is seen at Friday's low of US$4.93 1/2 and then at US$4.89 1/2.

 

Large commercials traders cut their short Chicago Board of Trade futures and options on futures positions by 20,716 contracts and added 13,000 contracts to their long positions and are now net short 492,538 contracts as of Jan 22, the Commodity Futures Trading Commission reported Friday in the supplemental commitment of traders report. Large speculative traders reduced their long positions by 5,713 contracts and added 4,359 contracts from their short positions and are now net long 233,616 contracts the CFTC said. Index funds increased their short positions by 6,020 contracts and added 1,877 contracts to their long positions and are net long 378,870 contracts, the CFTC said.

 

In other corn news, the CME Group raised margins on corn futures, effective at the close of business Monday, the exchange said.

 

Corn futures on China's Dalian Commodities Exchange settled modestly higher with the benchmark Sept. contract up RMB10 at 1,744RMB/tonne.