February 22, 2010

 

CBOT Corn Outlook on Monday: Up 3-5 cents on overnight gains, outside markets

 

 

Chicago Board of Trade corn futures are poised to open higher Monday following overnight gains amid outside market support, traders said.

 

Corn is called 3 to 5 cents higher. In overnight trade, March corn was up 5 cents to US$3.65 per bushel and May corn was up 4 1/2 cents to US$3.76 1/4.

 

A weaker dollar and stronger crude oil helped fuel gains overnight, traders and analysts said, and could continue to provide support Monday. There is little fundamental news in the market, so any shift in those outside markets would likely move corn, analysts said.

 

The market is widely considered rangebound, with little additional upside potential. Corn is approaching the "overbought category" and could soon pull back, said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

A trader said there is some talk Monday about heavy rains in South America, which could hurt production there, although crops there are still expected to be very large.

 

Amid large U.S. and South American supplies, traders are watching for signs of strong demand, with some analysts noting better-than-expected weekly export sales Friday. But demand on the whole is seen as unremarkable and not strong enough to push the market out of its range.

 

Managed money accounts slightly reduced both their long and short CBOT corn positions in the week ended Feb. 16, the Commodity Futures Trading Commission said Friday. A disaggregated commitments of traders report showed that managed money cut 314 contracts from their long positions, leaving them with 178,733 contracts, and cut 910 contracts from their short positions, leaving them with 137,226.

 

Meanwhile, the supplemental commitments of traders report showed that non-commercial speculative funds maintained a small net short position, cutting 2,035 contracts from their short positions and adding 285 contracts to their long positions, leaving them net short 2,243 contracts.

 

The next downside price objective for the bears is to push and close March prices below solid technical support at the February low of US$3.59 a bushel, a technical analyst said. The bulls' next upside price objective is to push prices above solid technical resistance at last week's high of US$3.80 1/2 a bushel.

 

First resistance for May corn is seen at US$3.77 and then at US$3.80 1/2. First support is seen at US$3.71 1/4 and then at US$3.69.