March 24, 2008

 

CBOT Corn Outlook on Monday: Up 4-6 cents; rebounding on oversold ideas

 

 

Corn futures on the Chicago Board of Trade are expected to start Monday's day session higher, following the overnight theme, rebounding from prior losses on oversold market conditions.

 

Analysts expect corn to open 4 to 6 cents higher.

 

In overnight electronic trading, May corn was 6 3/4 cents higher at US$5.14 1/4, July corn was 6 3/4 cents higher at US$5.264, and December corn was 5 cents higher at US$5.26 1/4.

 

The market is poised for a recovery early Monday, benefiting from technically inspired buying amid ideas the recent setback in prices have left futures oversold, analysts said.

 

The market is expected to turn its attention back to supportive fundamental outlooks, with signs of stability in equity and Asian grain markets overnight providing support to prices, analysts added.

 

Technical short covering is seen as a feature in early action, with stability in world markets an underlying feature, but traders remain on guard for additional fund liquidation as risk aversion remains a feature in uncertain economic times, a CBOT floor analyst said.

 

Nevertheless, outlooks for smaller 2008 U.S. corn acreage coupled with solid underlying demand places increased pressure on farmers to produce strong yields, leaving little room for error in production, analysts said. This should keep futures fundamentally supported heading toward next week's planting intentions report, analysts added.

 

A technical analyst said serious near-term chart damage was inflicted last week to begin to suggest that a near-term market top is in place. The next upside price objective for July corn is to push and close prices above solid technical resistance at US$5.39 1/4 which would fill on the upside Thursday's downside price gap. The next downside price objective is to push and close prices below major psychological support at US$5.00.

 

First resistance for July corn is seen at US$5.25 and then at Thursday's high of US$5.32 1/2. First support is seen at US$5.14 and then at US$5.10.

 

Index funds boosted their CBOT long corn futures and options on futures positions by 4,421 contracts and adding 1,267 contracts to their short positions and are now net long 449,511 contracts as of March 18, the CFTC reported Friday in the supplemental commitment of traders report. Commercial traders decreased their short positions by 17,058 contracts, while increasing their long positions by 26,937 contracts, and are now net short 553,986 contracts. Traditional funds decreased their long positions by 37,999 contracts and added 4,751 contracts to their short holdings and are now net long 182,935 contracts, the CFTC said.

 

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