February 25, 2008

 

CBOT Corn Outlook on Monday: Up 3-5 cents, wheat spillover, technical buying

 

 

Corn futures on the Chicago Board of Trade are poised for a higher start to Monday's day session, feeding off carryover technical buying and spillover strength from wheat futures.

 

Analysts expect corn to open 3 to 5 cents higher.

 

In overnight electronic trading, March corn was 4 cents higher at US$5.26 1/4, May corn was 4 1/4 cents higher at US$5.39 1/4, July corn was 3 3/4 cents higher at US$5.50 1/2, and December corn was 4 1/4 cents higher at US$5.54 1/2.

 

CBOT futures set new contract highs in overnight trade.

 

Follow through buying from the overnight session's run to new contract highs is seen buoying upside momentum, with a sharp rise in neighboring wheat futures expected to lift prices as well, analysts said.

 

A quiet new front is seen keeping attention on advances in neighboring grains, with the continued surge of wheat futures to uncharted territory lending support to corn's bullish uptrend, analysts added.

 

Strength in outside markets should aide the higher tonnee, with futures supported by the lingering acreage battle with soybeans and wheat as they each try to gain and sustain needed acreage in 2008, traders said.

 

However, with futures trading at contract highs, any sign of upside exhaustion could open the door for a setback in prices, as traders look to book profits on any sign of weakness, a CBOT floor analyst said.

 

A technical analyst said corn bulls' next upside price objective is to push and close July Corn prices above solid resistance at the contract high of US$5.51 1/4. The next downside price objective is to push prices below solid support at US$5.21 1/2, which would fill on the downside an upside price gap on the daily bar chart.

 

First resistance for July corn is seen at last week's high of US$5.50 and then at US$5.51 1/4. First support is seen at Friday's low of US$5.44 and then at last week's low of US$5.37 1/2.

 

Index funds boosted their CBOT long corn futures and options on futures positions by 18,576 contracts and trimmed their short positions by 1,168 contracts and are now net long 411,907 contracts as of Feb. 19, the CFTC reported Friday in the supplemental commitment of traders report. Large speculative traders increased their long positions by 11,783 contracts and are now net long 255,138 contracts. Commercial traders added 38,522 contracts to their short positions and are now net short 578,813 contracts, the CFTC said.

 

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

 

In other news, South African corn stocks fell by 591,000 metric tonnes to 2.565 million tonnes in January from 3.156 million tonnes in December - the sixth straight drop, the South African Grain Information Service's data showed Monday. Stocks consisted of 1.746 million tonnes of white corn and 819,000 tonnes of yellow corn.

 

The DTN Meteorlogix Weather Service said periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops.