March 22, 2010

 

CBOT Corn Outlook on Monday: Seen starting lower on outside pressure

 

 

Pressure from outside markets is expected to weigh on Chicago Board of Trade corn futures early Monday as traders continue to look ahead to a key government crop report.

 

Nearby CBOT May corn is called to open 1 cent to 3 cents per bushel lower. In overnight electronic trading, CBOT May corn dipped 2 1/2 cents, or 0.7%, to US$3.72.

 

Strength in the U.S. dollar and losses in crude oil are bearish influences on prices, a CBOT floor analyst said. A firm dollar is often seen as bearish because of the perception it makes U.S. grain less attractive to foreign buyers and reduces investors' appetite for risk. Crude oil and corn are linked because ethanol is made from corn.

 

Trading will likely be choppy this week as market participants wait for the U.S. Department of Agriculture to issue its annual prospective plantings report March 31, an analyst said. The report will give the market the government's latest estimate for U.S. corn acres for the coming crop year.

 

Overall, trading overnight was quiet, traders said. May corn on Friday finished down for the day but up 10 1/4 cents for the week.

 

Traders are waiting to see whether "last week's momentum will continue into the upcoming planting season," Country Hedging said. They are watching weather forecasts amid worries about the potential for wet weather to delay spring U.S. plantings, but "that's a long ways out," an analyst said.

 

Periodic rain and some snow through southern and eastern areas of the Midwest "will keep fields very wet and delay any early field work or planting," according to private weather firm DTN Meteorlogix. The weather is drier through the northwest, but some rivers are still swollen due to snow melt, the firm said.

 

The markets may need "additional fundamental weather developments" to support continued gains in the prices, an analyst said. Corn is near "significant areas of resistance" on technical charts, he said.

 

However, last week's gains have helped improve the technical outlook for corn, another analyst said. Bears still have the slight overall near-term technical advantage, but bulls last week gained "some fresh upside near-term technical momentum to begin to suggest that a market low is in place," he said.

 

The next downside price objective for the bears is to push and close May corn below solid technical support at the February low of US$3.59, the technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the March high of US$3.92, he said.

 

First resistance for May corn is seen at last week's high of US$3.76 1/2 and then at US$3.80. First support is seen at Friday's low of US$3.71 1/2 and then at US$3.65, the technical analyst said.