February 8, 2010

 

CBOT Corn Outlook on Monday: Up amid short-covering, commodity gains

 

 

Chicago Board of Trade corn futures are expected to open higher Monday amid a widespread bounce in commodities following recent losses, analysts said.

 

Corn is called 3 cents to 5 cents higher. In overnight trade, March corn was up 4 1/4 cents to US$3.55 3/4 per bushel and May corn was up 3 3/4 cents to US$3.66 3/4.

 

The market is poised for a firm start amid short-covering, traders said. They added that outside markets could add modest support, as other markets such as crude oil and gold climbed overnight. Wheat and soybeans are also poised for a stronger start, they said.

 

While corn has fallen below its 200-day moving average, other commodities, such as crude oil, gold and copper have held at that support level, Country Hedging said in a morning commentary.

 

Fundamentally the market has little to rally on, as U.S. supplies are considered ample and South America is growing a large crop thanks to favorable weather.

 

Weekly export inspections will not be released Monday due to the snowstorm in Washington, D.C., which has shut down government offices. The storm is also calling into question whether Tuesday's supply and demand report will be released as scheduled at 8:30 a.m. EST.

 

Analysts surveyed by Dow Jones Newswires expect on average the U.S. Department of Agriculture to peg 2009-10 U.S. corn ending stocks at 1.748 billion bushels, down slightly from a January estimate of 1.764 billion but above the prior year's total of 1.673 billion.

 

Technically, the market has been consistently setting fresh four-month lows recently, and a technical analyst said it had a bearish weekly low close Friday.

 

The next downside price objective for the bears is to push and close March prices below solid support at US$3.40 a bushel, the technical analyst said. Bulls' next upside price objective is to push prices above solid technical resistance at last week's high of US$3.68 1/4 a bushel.

 

First resistance for March corn is seen at Friday's high of US$3.55 1/2 and then at US$3.59, the technical analyst said. First support is seen at US$3.50 and then at Friday's low of US$3.47 1/2.

 

Managed money accounts added short CBOT corn positions in the week ended Feb. 2, the Commodity Futures Trading Commission said Friday. The disaggregated commitments of traders report showed that the managed money category cut 5,097 contracts from their long positions, leaving a total of 189,413, and added 14,321 contracts to their short positions, for a total of 113,522.

 

Meanwhile, the supplemental commitments of traders report showed that traditional speculative funds added 17,963 contracts to their short positions, which Rabobank said was the largest increase among the grain and oilseed markets. Those speculative funds remained net long more than 34,000 contracts, however.