March 16, 2009

Chicago Board of Trade corn futures are expected to open slightly higher Monday, following overnight gains and momentum from last week, analysts said.

 

Corn is called 1 to 3 cents higher. In overnight trading, May corn was up 1 1/2 cents to US$3.90 per bushel and July corn was up 1 3/4 cents to US$4.

 

Analysts said outside markets were mixed Monday morning, with crude oil lower but equities poised for more gains. Although there's nothing strongly bullish for the market to digest Monday, corn has upside momentum after last week's gains, analysts said.

 

"I think it's just continued positive movement, with the stock market the biggest reason," Dax Wedemeyer, an analyst for U.S. Commodities in West Des Moines, Iowa.

 

He added that higher soybeans should offer support, as will wheat, which is firm because of dry weather in the U.S. Plains.

 

The May contract gained 27 cents last week and surged above key moving averages. It is just below the 100-day moving average around US$3.90 1/4, and has not been above that average since July. Many traders and analysts see the market testing psychological resistance at US$4.

 

Friday's commitment of traders report from the Commodity Futures Trading Commission showed a large shift in speculative fund positions. Speculative funds added 12,817 contracts to their CBOT corn long positions for the week ended March 10 and cut 23,395 contracts from their short positions, putting them net short 24,092 contracts, the CFTC said.

 

The supplemental commitment of traders report also said commercial funds cut 10,413 contracts from their long positions and added 28,646 contracts to their short positions, putting them net short 128,729 contracts. Index funds cut 1,848 contracts from their long positions and added 3,013 contracts to their short positions, putting them net long 225,134 contracts, the CFTC said.

 

The market was supported late last week by concerns about this year's corn plantings, highlighted by private estimates that planting would be sharply lower compared with last year.

 

"Seasonally grains start to move higher in this time frame as we move into spring," Wedemeyer said. "We're all fighting for acres right now."

 

The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.57 a bushel. The next upside price objective is to push and close prices above major psychological resistance at US$4.

 

First resistance for May corn is seen at Friday's high of US$3.89 3/4 and then at US$3.93. First support is seen at Friday's low of US$3.83 and then at US$3.75.