January 29, 2007

 

CBOT Corn Outlook on Monday: Flat down 1 cent; lacks fresh market directives

 

 

A lack of fresh market directives amid a quiet news front has analysts anticipating a steady to weaker start in day session activity for Chicago Board of Trade corn futures.

 

Analysts expect corn to open steady to 1 cent lower.

 

In overnight electronic trading, March corn ended 3/4-cent lower at US$4.04 3/4 and May corn finished 1/2-cent lower at US$4.17.

 

The overnight theme will set the tonnee in early trade, with futures looking to technical factors and outside influences for initial direction, a CBOT floor analyst said.

 

A choppy, two-sided tone may be on tap for futures, as the market continues to consolidate in a range after the spike higher moves that followed the Jan. 12 crop report, he added.

 

Early weakness in metals and energy futures will generate light selling pressure, but traders anticipate the market's bullish long term outlooks will limit downside moves. Meanwhile, light pressure may be exerted from the potential for profit taking setbacks amid the heavy build up speculative length, and the large commercial shorts in the market, analysts said.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 356,186 combined corn futures and options contracts as of Jan. 23, down from 368,755 the prior week. Traditional large speculative traders were net long 285,284 contracts compared to net longs of 275,313 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 576,071 contracts, up from the previous week's 560,206 contracts.

 

A technical analyst said trading has become choppy, but corn bulls are still in firm technical command with a bull flag or bullish pennant pattern possibly forming on the daily bar chart.

 

First resistance for March corn is seen at Friday's high of US$4.08 and then at US$4.10. First support is seen at Friday's low of US$4.02 and then at US$4.00.

 

U.S. Midwest cash corn basis bids were mostly steady Friday, cash traders said. Spot U.S. cash corn bids were down 2 cents in Keokuk, IA, down 1-cent in central Illinois, and up 1-cent in Evansville, IN.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report 11:00 a.m. EST.

 

The DTN Meteorlogix weather forecast said a drying trend continues this week in Argentina crop areas with some hot weather possible at times. Some increasing stress to crops is expected. Isolated thundershowers are possible today in the west and south-central areas of the crop belt, but elsewhere in the region remains dry. Mainly dry conditions are expected Tuesday and Wednesday, with temperatures averaging near to above normal, Meteorlogix said.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled higher, with the benchmark September contract settling RMB6 higher at RMB1,706/tonne.