February 4, 2008

 

CBOT Corn Outlook on Monday: Up 3-5 cents on higher wheat, soy strength

 

 

Chicago Board of Trade corn futures are expected to open day session trading 3-to-5 cents higher Monday, bolstered by spillover from stronger wheat and soybean prices in overnight trading as well as continued speculative interest, analysts said.

 

In overnight electronic trading, March corn gained 5 1/4 cents to US$5.05 3/4 per bushel and December increased 5 3/4 cents to US$5.24 3/4. Electronic trading volume in March was 4,446 contracts.

 

Corn should be supported by spillover support from the continued rally in wheat, an analyst said. Both CBOT and MGE wheat futures were higher in overnight trade and corn will be underpinned by the gains. Addtional support should come from double-digit gains posted in soybeans overnight as corn needs to keep pace with soybean prices to encorage planting this year, the analyst said.

 

The fundamental picture hasn't changed but speculative interest continues to support prices, an analyst said. It's the beginning of a new month and open interest jumped sharply despite the lack of fresh news, indicating increased interest from speculative traders. Preliminary corn open interest increased over 16,000 contracts Friday. If speculative traders continue to buy, corn will remain well supported, the analyst said.

 

Weather in Argentina is mixed, a floor trader said. Near-term the weather is mostly dry but the forecast is for the potential for showers later this week, the trader said.

 

In Argentina mainly dry weather is expected through Tuesday with light showers possible in southern sections Wednesday, DTN Meteorlogix Weather said. Additional rain is possible Thursday into Friday. Temperatures Tuesday and Wednesday are forecast near-to-below normal.

 

On daily technical charts, March corn closed lower and near the session low despite trading to a fresh two-week high in early trade on Friday, a technical analyst said. Corn bulls have the near-term technical advantage and will also follow wheat and crude oil and gold, the analyst said. The next upside price objective is to push and close prices above solid resistance at US$5.09 1/2, last week's high. The next downside price objective is closing prices below solid support at US$4.90.

 

First resistance for March corn is seen at US$5.05, and then at US$5.09 1/2. First support is seen at US$4.99 1/2, Friday's low and then at US$4.95.

 

In other corn news, large speculative traders reduced their long Chicago Board of Trade futures and options on futures positions by 12,409 contracts and cut 2,362 contracts from their short positions and are now net long 223,568 contracts as of Jan 29, the Commodity Futures Trading Commission reported Friday in the supplemental commitment of traders report. Large commercial traders trimmed their long positions by 3,242 contracts while adding 7,691 contracts to their short positions and are now net short 503,472 contracts the CFTC said. Index funds increased their long positions by 5,948 contracts and added 1,689 contracts to their short positions and are net long 383,131 contracts, the CFTC said.

 

The U.S. Department of Agriculture reported 121,920 tonnes of U.S. corn had been sold to Japan for delivery in the 2007-08 marketing year.

 

Corn futures on China's Dalian Commodities Exchange settled higher as market participants evened up positions ahead of the Lunar New Year holiday which begins Wednesday. The benchmark Sept. contract settled up RMB/21 at 1,773RMB/tonne.