February 26, 2007

 

CBOT Corn Outlook on Monday: Up 6-8 cents on e-CBOT, technical strength

 

 

Analysts anticipate a firm opening to day session trading in Chicago Board of Trade corn futures Monday, with strong overnight gains and technical momentum seen as underpinning features.

 

Analysts expect corn to open 6 to 8 cents higher.

 

In overnight electronic trading, March corn ended 7 cents higher at US$4.37 1/4, May corn finished 7 1/2 cents higher at US$4.50, and December corn was 6 1/2 cents higher at US$4.27 1/4.

 

Overnight price strength will set the stage for upward movement initially, with technical strength and anticipation of supportive data from the U.S. Department of Agriculture's outlook conference this week attracting new speculative buying, said Don Roose, president U.S. Commodities in West Des Moines, IA.

 

The absence of demand rationing at current price levels, slow country grain movement amid wintry weather in the Midwest, as well as concerns over the uncertainty of weather events for spring plantings is allowing the market to aggressively add risk premium, analysts added.

 

Meanwhile, traders will be watching for signs of upside exhaustion with prices at new contract highs, on guard for profit taking pressure to emerge.

 

A technical analyst said the next major upside technical price objective for market bulls is to produce a close above solid chart resistance at US$4.50 basis May futures. That level is within striking distance. The next downside price objective is producing a close below solid chart support at 4.25.

 

First resistance for May corn is seen at the contract high of US$4.48 1/4 and then at US$4.50. First support is seen at US$4.40 and then at US$4.35.

 

The DTN Meteorlogix Weather Service forecast said the US and European models are in fair to good agreement during the next 5-6 days, fair to poor agreement during days 7-10. Another significant upper level disturbance is expected to bring snow, ice, rain and strong winds to the Midwest region during the 5 day period. It should be warmer ahead of this disturbance, colder behind it.

 

Meanwhile in Argentina, moderate to heavy rain will provide adequate to surplus soil moisture for crops, but some flooding may develop, Meteorlogix reports.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 353,069 combined corn futures and options contracts as of Feb. 20, up from 344,527 the prior week. Traditional large speculative traders were net long 312,921 contracts compared with net longs of 304,534 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 606,201 contracts, up from the previous week's 584,820 contracts.

 

On tap for Monday, the USDA is scheduled to release its weekly export inspection report at 11 a.m. EST.

 

U.S. Midwest cash corn basis bids were mostly steady Monday, cash traders said. Spot U.S. cash corn bids were down 2 cents in Keokuk, IA., and down 2 cents in central, Ill.

 

In other news, the Mexican government on Friday announced detailed plans for increasing total national corn production by 43% to 30 million metric tonnes to be self-sufficient within the next six years. The principal target of the new policies is to increase not only producing areas but also productivity in order to strengthen the supply chain of white corn needed for making the key staple tortillas - a corn pancake.

 

Isolated drought conditions and the heat wave of the last 10 days in many parts of South Africa affected the corn crop severely, said John Purchase, the general manager of independent producers' organization Grain SA, the South African Press Association reported Monday.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled higher, with the benchmark September corn contract settling RMB28 higher at RMB1,728/tonne.