March 9, 2009

Chicago Board of Trade corn futures are expected open higher Monday following overnight gains, although outside markets could limit any rally.

 

Corn is called 4 to 6 cents higher. In overnight trade, CBOT May corn was up 6 1/4 cents a bushel at US$3.67 3/4.

 

The market extended gains from Friday's trade in overnight action, but crude oil has since retreated. Traders add that a stronger dollar and apparent weakness in the U.S. stock market could also weigh.

 

"Calls right now are higher, but it's anybody's guess how long that will last," a trader said.

 

The trade is looking ahead to Wednesday's supply and demand report, but traders and analysts are not expecting major changes to the balance sheet. One floor trader said the most anticipated number will be soybean carryout.

 

The trader added that the political situation in Argentina, where farmers have threatened a strike, will continue to be monitored. Although there appeared to be a more "conciliatory" tone last week, cash corn prices in South America have nonetheless been climbing, which is supportive to futures prices.

 

A trader said there could be at least minor psychological support from recent heavy rains seen in much of the nation's mid-section.

 

"It's far too early to get worried about planting delays," a trader said. "But it is awfully wet."

 

The Commodity Futures Trading Commission said Friday that speculative funds cut 1,173 contracts from their CBOT corn long positions and cut 7,964 from their short positions. Commercial funds cut 486 contracts from their long positions and added 680 contracts to their short positions.

 

Index funds added 3,755 contracts to their long positions and added 3,282 contracts to their short positions, the CFTC said in its supplemental commitment of traders report.

 

In other news, Brazil's National Commodities Supply Corp., or Conab, estimated the 2008-09 corn crop at 50.3 million metric tonnes, broadly in line with last month's estimate. This is 14.1% lower than last year's harvest.

 

COFCO, China's major grain trader, said Monday government reserves will be enough to stabilize domestic agriculture prices. The trader, who spoke on the sidelines of the Chinese People's Political Consultative Conference, expects demand for food-related commodities to stay week this year.

 

There were 1,658 contracts delivered against the March corn future, with Bunge's house account issuing 743 and Man Professional Clearing customer account stopping 843. Other issuers and stoppers were scattered. The last date assigned was March 6.

 

Technical analyst Jim Wyckoff said first resistance for May corn is seen at Friday's high of US$3.66 1/4 and then at US$3.70. First support is seen at Friday's low of US$3.58 and then at US$3.50.