February 11, 2008

 

CBOT Corn Outlook on Monday: Seen 7-9 cents lower on overnight declines

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 7-to-9 cents lower Monday following losses set in overnight activity, analysts said.

 

In overnight electronic trading, March corn fell 8 1/4 cents to US$4.99 3/4 per bushel and December declined 7 3/4 cents to US$5.22 1/4. Electronic trading volume in March was over 13,000 contracts.

 

Technically, corn experienced a "key reversal last week on daily technical charts which could indicate a near-term top is in place, and as a result the market is nervous and sold off in overnight activty, a commission house analyst said.

 

Surging wheat futures might limit the downside as could firm metals and energy prices, a trader said.

 

Corn has been supported by the surge in wheat futures and nearby wheat rallied sharply in overnight trade to new all-time highs again.

 

Friday, the Commodity Futures Trading Commission approved new daily price limits of 60 cents for wheat, effective Sunday night. In overnight trade, both MGE and KCBT March wheat ended up 60 cents per bushel and CBOT March wheat finished 55 cents higher.

 

Generally good growing weather in South American corn growing regions has diminished recent concerns about crop production and might limit any upside strength, the trader said.

 

In Argentina generally favorable conditions are seen for corn due to recent rains and no severe heat, DTN Meteorlogix Weather said. Mainly dry weather is forecast through Wednesday near to above normal west and below normal east Tuesday and Wednesday, Meteorlogix Weather said.

 

On daily technical charts, March corn closed higher but nearer the session low. Last week's price action confirmed a bearish key reversal on the daily bar chart,a technical analyst said. A bearish buying "exhaustion tail" was also confirmed last week, the analyst said. The corn bulls' next upside objective is to close prices above solid technical resistance at US$5.28 3/4, with the next downside objective for the bears is to produce a close below last week's low of US$4.91.

 

First resistance for March corn is seen at Friday's high of US$5.19 and then at US$5.28 3/4. First support is seen at US$5.03, Friday's low and then at US$5.00.

 

Large commercial traders boosted their short Chicago Board of Trade corn futures and options on futures positions by 31,914 contracts and are now net short 541,008 contracts as of Feb. 5, the Commodity Futures Trading Commission reported Friday in the supplemental commitment of traders report. Large speculative traders added 13,341 contracts to their long positions and reduced their short positions by 863 contracts and are now net long 237,772 contracts the CFTC said. Index funds increased their long positions by 14,568 contracts and added 1,352 contracts to their short positions and are net long 396,347 contracts, the CFTC said.

 

In other corn news, China's Dalian Commodities Exchange remains closed due to the Lunar New Year holiday.