March 2, 2009

Chicago Board of Trade corn futures are expected to open 4 cents to 6 cents lower Monday as concerns about general economic weakness dominate trade.

 

In overnight electronic trading, CBOT March corn dropped 5 cents to US$3.46 a bushel; May corn fell 5 cents to US$3.54 and July corn lost 5 3/4 cents to US$3.62 3/4.

 

"The stock market's getting beat up, crude's down more than US$2 and the dollar is up; it's all negative and it will carry us lower this morning," a CBOT floor trader said.

 

On top of a negative outside-market environment, unfriendly export news is also a challenge for the U.S. corn market.

 

"Lack of positive export news pressured the market overnight, after prices tried to mount a small rally on renewed hopes for the ethanol industry," said Bryce Knorr, Farm Futures senior editor, in his daily market commentary.

 

"News reports indicated Japan was interested in importing more corn out of the Black Sea, which came on the heels of a poor total of new sales last week," he said.

 

Knorr also noted that open interest in corn is dwindling at 12,422 contracts, with new positions in puts outnumbering calls.

 

Non-commercial speculative funds were net short 67,095 futures and options contracts as of Feb 24., according to the supplemental commitment of traders report issued Friday by the Commodity Futures Trading Commission. Commercial funds were net short 88,503 positions. Index funds held a net long position of 229,522 contracts.

 

March corn deliveries totaled 2,322 lots. A customer account at MF Global was the primary issuer at 884 lots. The house account of Term Commodities was primary stopper.

 

Technical analysis supports ideas of greater downside movement after closing at a weekly low Friday.

 

"Corn bears do still have the overall near-term technical advantage," a market technician said.

 

The bears are pushing to close May corn below solid longer-term technical support at US$3.50 a bushel, the technician said.

 

The bulls are aiming to pierce solid technical resistance at last week's high of US$3.80 1/2, he said, pegging first resistance at US$3.60, then US$3.65.

 

Dry weather has caused significant crop damage in Argentina, but some beneficial rains aided filling corn last week," DTN Meteorlogix said.

 

The private weather firm forecast scattered showers throughout Argentina's corn-growing areas.

 

In other global corn news, European Union nations refused Monday to force Austria and Hungary to allow the cultivation of Monsanto Co. (MON) genetically modified corn, rejecting a European Commission initiative, the Czech E.U. presidency said.