March 17, 2008

 

CBOT Corn Outlook on Monday: Down 2-4 cents, follow-through sales, spillover

 

 

Chicago Board of Trade corn futures are poised for a lower start to Monday's day session, taking its cue from overnight trade, with follow-through selling from Friday weighing prices, analysts said.

 

Analysts expect corn to open 2 to 4 cents lower.

 

In overnight electronic trading, May corn was 3 cents lower at US$5.56 1/4, July corn was 2 3/4 cents lower at US$5.68 1/2, and December corn was 3 1/2 cents lower at US$5.71 1/2.

 

Carryover selling from Friday's slide coupled with spillover weakness from the soy complex is expected to lead prices lower, as the market backpedals on speculative selling associated with outside economic uncertainties, analysts said

 

News that JPMorgan Chase & Co. (JPM) during the weekend agreed to buy Bear Stearns Cos. (BSC) at a massive discount and the Federal Reserve stepped in with an emergency discount rate cut is weighing on investor confidence, traders said.

 

Sharp declines in crude oil futures is expected to lend some pressure to prices.

 

At 9:32 a.m. EDT, April crude oil futures are US$3.74 lower at US$106.47 per barrel.

 

Otherwise, a quiet news front is expected to keep traders looking to outside market influences, while bullish underlying fundamental outlooks are seen attracting commercial buying on price breaks, a CBOT floor analyst said.

 

A technical analyst said no serious chart damage was inflicted on last week's bearish weekly low close. However, corn bulls still have the near-term technical advantage, the next upside price objective is to push and close July prices above resistance at the contract high of US$5.91. The next downside price objective is to push and close prices below solid support at the March low of US$5.58 1/4.

 

First resistance for July corn is seen at US$5.75 and then at US$5.80. First support is seen at Friday's low of US$5.61 1/2 and then at US$5.58.

 

Index funds boosted their CBOT long corn futures and options on futures positions by 9,021 contracts while trimming 3,885 contracts from their short positions and are now net long 446,312 contracts as of March 11, the CFTC reported Friday in the supplemental commitment of traders report. Commercial traders increased their short positions by 10,469 contracts, as well as increasing their long positions by 17,431 contracts, and are now net short 597,981 contracts. Traditional funds decreased their long positions by 15,872 contracts and trimmed 596 contracts from their short holdings and are now net long 225,684 contracts, the CFTC said.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EDT.