March 30, 2009

 

CBOT Corn Outlook on Monday: Down 3-5 cents on outside market pressure

 

 

Chicago Board of Trade corn futures are expected to open lower Monday amid pressure from equities and other outside markets, traders said.

 

Corn is called down 3 to 5 cents lower. In overnight trading, May corn was down 5 1/4 cents to US$3.81 3/4 per bushel and July corn is down 5 1/2 cents to US$3.92.

 

Expected losses in the stock market on uncertainty about the economy following the ouster of General Motors' CEO is expected to set the tone, with a "sell first" mentality in equities spilling into other markets, a trader said. Crude oil and the dollar also appear to be bearish Monday, traders said.

 

The trade is awaiting Tuesday's key planting intentions and quarterly grain stocks reports from the U.S. Department of Agriculture. The reports will be released at 8:30 a.m. EDT.

 

Analysts are expecting on average the USDA to project acreage of 84.548 million acres, down from 86 million last year. Estimates vary widely, however, from below 82 million to as high as 89 million acres. Some analysts say the report could have a long-term effect on corn prices, while others say it could be short-lived.

 

"We'll trade the report in a vacuum tomorrow, but if it's not shocking" the trade will again turn to outside factors, such as the dollar and equities, for direction, a trader said.

 

The trade is paying some attention to wet weather in the U.S. corn belt, which could delay early planting. Traders and analysts mostly say it's too early to worry about the weather. Focus on the weather is expected to increase following the USDA's reports.

 

Volume has been very low in corn recently, but analysts note that open interest has gained, a sign of increased fund activity and end-user buying.

 

Speculators cut 2,779 contracts from their CBOT corn long positions and cut 4,609 contracts from their short positions, putting them net long 13,468 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed commercial funds added 12,776 contracts to their long positions and added 26,576 contracts to their short positions, putting them net short 179,850 contracts. Index funds added 11,888 contracts to their long positions and cut 2,610 contracts from their short positions, putting them net long 241,109 contracts.

 

The next upside price objective is to push and close May prices above solid technical resistance at last week's high of US$4.03 3/4, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.70 a bushel.