March 26, 2007

 

CBOT Corn Outlook on Monday: Down 3-4 cents on weak e-CBOT, liquidation

 

 

Chicago Board of Trade corn futures are predicted to start trading 3 to 4 cents lower Monday, following the tone established in overnight trade as well as expected position liquidation by commodity trading funds ahead of Friday's U.S. Department of Agriculture planting intentions and stocks reports, analyst said.

 

In overnight electronic trading, May corn fell 3 1/4 cents to US$4.00 per bushel, July declined 3 3/4 cents to US$4.11 1/2 and December ended 3 cents lower to US$4.06 3/4. e-CBOT volume in May was 6,520 contracts.

 

Corn was lower overnight and should start on the defensive on follow through from the overnight session, a commission house analyst said. The funds have been liquidating their positions ahead of the USDA reports and corn could see continued fund liquidation, though the market could derive some support from stronger energy prices, he added.

 

Follow through technical weakness and drier weather forecasts are expected to weigh on prices, a floor analyst said. However, with the USDA reports due out at the end of the week, corn is expected to see some short covering ahead of it, the analyst added.

 

Large speculative traders cut their short CBOT corn futures and options on futures positions by 4,749 contracts and reduced their long holdings by 5,948 contracts and are now net long 239,430 contracts as of Mar. 20, the CFTC reported Friday.

 

Large commercial traders increased their long positions by 9,917 contracts and added 10,916 contracts to their short positions and are now net short 533,314 contracts, the CFTC said.

 

In the western U.S. Midwest scatted light showers with amounts of 0.10-0.50 inch and locally heavier are forecast for Tuesday with dry weather forecast for Wednesday, DTN Meteorologix Weather. Temperatures are expected to average above or well above normal.

 

In the eastern sections of the region, there is a chance for light showers Tuesday with locally heavier amounts possible in western and northern locations Wednesday, Meteorologix Weather said, with dry weather returning Wednesday. Temperatures are expected to average well above normal.

 

On daily open technical charts, CBOT May corn settled lower and traded a bearish "outside day" down on the daily bar chart, a technical analyst said. Bulls would gain fresh upside technical momentum by closing prices above resistance at Friday's high of US$4.12 1/4. The bears' next downside price objectives closing below solid chart support at this month's low of US$3.92 1/4, the analyst said.

 

First resistance for May corn is seen at US$4.05, and then at US$4.08. First support is seen at US$4.02 3/4 and then at US$4.00.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the bench mark September contract down RMB8 at RMB1,682/tonne.

 

Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 EDT (1500 GMT).