March 1, 2010

CBOT Corn Outlook on Monday: Steady-up 1 cent amid planting concerns

Chicago Board of Trade corn futures are expected to be firm at Monday's open as the prospect of soggy Midwest soil this spring underpins the market.

Corn is called steady to up 1 cent. In overnight trade, March corn was up 1 cent to US$3.79 per bushel and May corn was up 1 cent to US$3.90.

Corn held firm overnight despite losses in soybeans and wheat, as a stronger dollar pressured commodities generally. Unlike soy and wheat, traders in the corn market are already talking about spring planting and the large snowpack that has to melt first.

"We're starting to look at the spring weather," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

The snow melt will deposit the equivalent of several inches of rain in parts of the corn belt, possibly causing flooding and extending how long it will take for soils to dry enough to allow farmers in the fields this spring, analysts say.

The next downside price objective for the bears is to push and close May prices below solid technical support at last week's low of US$3.71 1/4 a bushel, a technical analyst said. Bulls' next upside price objective is to push and close prices above major psychological resistance at US$4.00 a bushel.

First resistance for May corn is seen at Friday's high of US$3.91 and then at US$3.95, the technical analyst said. First support is seen at US$3.85 and then at Friday's low of US$3.83.

Traditional speculative funds, after turning net short briefly, moved back to a net long position, the Commodity Futures Trading Commission showed Friday. The non-commercial spec funds cut 17,697 contracts from their short positions and added 2,651 contracts to their long positions, leaving them net long about 18,000 contracts.

Meanwhile, managed money accounts cut their short CBOT corn positions in the week ended Feb. 23, the CFTC said Friday. The disaggregated commitments of traders report showed managed money cutting 16,687 contracts from its long positions, leaving it with 120,539, and adding 6,673 contracts to its long positions, for a total of 185,406.

The March contract gained 5.2% last week. Part of the gain is seasonal, traders say. Country Hedging added in a morning commentary that there could be some fresh buying to start the month, as "funds love corn."