March 29, 2010

 

CBOT Corn Outlook on Monday: Up 1-2 cents amid pre-report short-covering

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Monday amid short-covering as traders position themselves ahead of Wednesday's key government report.

 

Corn is called 1 to 2 cents higher. In overnight trade, May corn was up 1 cent to US$3.57 1/4 per bushel and July corn was up 1/2 cent to US$3.68.

 

After falling 4.9% last week, the market is oversold, which could prompt short-covering, said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

Positioning ahead of Wednesday's planting intentions and quarterly grain stocks report will be a dominant feature of the market Monday and Tuesday, and traders will be reluctant to add on new positions until then, analysts said. They noted that volume has sagged recently.

 

Views of the weather are mixed. While temperatures are forecast to soar in the Midwest later this week, some traders are looking further ahead, to 6-to 10-day and 11-to 15-day forecasts that show wet conditions.

 

So while the warm weather this week will allow for fieldwork, planting could still be pushed back because of the rains.

 

McCambridge said that given high soil moisture, "even a moderate shower" will likely keep farmers out of the fields this spring. Still, he said it is too soon to be concerned about planting in what so far has been a "normal" start to the season.

 

"We're at the end of March, we have plenty of time to get the crop in," he said. "Soil temperatures in most areas aren't high enough to even think about planting right now anyway."

 

Managed money accounts piled on CBOT corn short positions in the week ended March 23, the Commodity Futures Trading Commission said Friday. The disaggregated commitments of traders report showed that managed money added 16,847 contracts to its short positions while cutting 9,206 contracts from its long positions, leaving a net long position of almost 30,000 contracts.

 

Meanwhile, the supplemental commitments of traders report showed a similar shift for speculative funds, which left them net short. Spec funds cut 3,364 contracts from its long positions, leaving a total of 172,870, and added 20,454 contracts to its short positions, for a total of 187,744 contracts. May CBOT corn slipped four cents during the week.

 

The next downside price objective for the bears is to push and close prices below solid longer-term technical support at US$3.50, a technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at US$3.76 1/2 a bushel.

 

First resistance for May corn is seen at US$3.59 and then at US$3.65, the technical analyst. First support is seen at last week's low of US$3.54 and then at US$3.50.