March 3, 2008

CBOT Corn Outlook on Monday: Up 7-9 cents on strong overnight trade, spillover

Chicago Board of Trade corn futures are predicted to start trading 7-to-9 cents higher Monday, after prices surged overnight on speculative buying and spillover from strong gains posted in the other grains, a commission house analyst said.

In overnight electronic trading, May corn jumped 8 1/2 cents to US$5.65 per bushel and December rallied 9 3/4 cents to US$5.74 1/2. Electronic trading volume in May was more than 13,000 contracts.

Corn was higher based on the sharp rallies in both soybeans and wheat overnight, the analyst said. May soybeans surged 31 cents to US$15.67 1/2 per bushel and May wheat rallied 39 3/4 cents to US$11.25 3/4. All-time highs were set in soybeans and corn. There is not much fresh fundamental news, but continued concerns about inflation should keep corn well supported, the analyst said.

Long-position holders are making money and will continue to support the market until something changes in the current outlook, a trader said. Demand for agricultural commodities continues to remain strong around the world, the trader said.

On daily technical charts, July corn closed higher Friday and did hit a fresh contract high and monthly high close, a technical analyst said. Corn bulls still have a solid near-term technical advantage and the bulls' next upside objective is to close prices above resistance at US$5.80 per bushel. The next downside objective is to close prices below solid support at US$5.51 1/4.

First resistance for July corn is pegged at Friday's contract high of US$5.71 and then at US$5.75. First support is seen at Friday's low of US$5.63 3/4 and then at US$5.58.First support is seen at US$5.42, Thursday's low and then at US$5.37 1/2.

Index funds increased their CBOT long corn futures and options on futures positions by 10,735 contracts and trimmed their short positions by 2,060 contracts and are now net long 420,583 contracts as of Feb. 26, the CFTC reported Friday in the supplemental commitment of traders report. Commercial traders boosted their short positions by 16,516 contracts and are now net short 596,298 contracts. Speculative traders cut 4,977 contracts from their long positions and are now net long 249,536 contracts, the CFTC said.

Deliveries posted against the Chicago Board of Trade March future were 1,467 contracts Monday. Large issuers included the customer account of ADM Investor Services which issued 1,007 contracts, and the customer account of Newedge, which issued 328 contracts. Large stoppers included the customer account of Bank of America, which stopped 600 contracts and the customer account of the Astro division of UBS Securities which stopped 600 contracts. The last trade assigned was Feb. 22.

In other corn news, China may increase importing major agricultural products to meet rising demand and tame inflation, the country's Commerce Minister said Monday. Corn futures on China's Dalian Commodity Exchange settled sharply higher with the September contract up RMB/50 at 1,856 RMB/tonne.