April 2, 2007

 

CBOT Corn Outlook on Monday: Limit down start seen on follow through

 

 

Chicago Board of Trade corn futures are expected to begin day session trading limit down or 20 cents lower Monday in the first several contract months on follow through selling from Friday's larger-than-expected planting intentions report from the U.S. Department of Agriculture and sharply prides in overnight electronic trading, floor analysts said.

 

In overnight electronic trading, May corn dropped 20 cents to US$3.54 1/2 per bushel, July fell 20 cents to US$3.65 1/2 and December declined 18 3/4 cents to US$3.64 3/4. E-CBOT volume in May was 12,793 contracts.

 

Corn should open up sharply lower on follow through selling from Friday's limit down losses and the continued sell off in overnight trading, a commission house analyst said.

 

On Friday, the USDA estimated 2007-08 planted corn acreage at 90.454 million acres, up from the 78.327 million acres planted in 2006, and above the average analyst estimate of 88.061 million acres.

 

The market should open limit down in the first several months but it should trade above it during the session, the commission house analyst added.

 

May corn has fallen almost US$1 per bushel since reaching its high in late February.

 

Large commercial traders cut their short futures and options on futures positions by 22,455 contracts and reduced their long positions by 8,328 contracts and are now net short 519,188 contracts as of March 27, the Commodity Futures Trading Commission reported Friday.

 

Large speculative traders reduced their long corn futures and options on futures positions by 10,173 contracts and added 1,046 contracts to their short holdings and are now net long 228,211 contracts.

 

Large index fund traders added 9,512 contracts to their long positions while adding 1,460 contracts to their short positions and are now net long 367,942 contracts, the CFTC said.

 

In the western U.S. Midwest, there is a chance for light showers changing to snow on Tuesday, with dry weather expected on Wednesday said DTN Meteorologix Weather. Temperatures are expected to average near-to-below normal Tuesday and below to much-below normal Wednesday.

 

In the eastern sections of the region, there is a chance for showers and rain Monday night changing into snow or snow showers in some locations before ending Tuesday with dry weather following Wednesday. Temperatures are expected near-to-above normal Tuesday and below normal Wednesday, DTN Meteorlogix Weather said.

 

On daily technical charts, CBOT May corn closed at a 2 1/2 month low as more near-term chart damage was done on Friday, a technical analyst said. The bears have near-term technical momentum on their side with corn in a five-week old down-trending channel on the daily bar chart. Bulls would regain technical momentum by pushing prices above major psychological resistance at US$4.00.

 

First resistance for May is seen at US$3.75 and then at US$3.80. First support is pegged at US$3.70 and then at US$3.62 1/2.

 

In other corn news, South Korea's Major Feedmill Group MFG, has bought 110,000 metric tonnes of U.S. corn, and the Pusan branch of the Korea Feed Association KFA, purrchased 55,000 metric tonnes of U.S. corn a trader in Seoul said Monday.

 

Corn futures on China's Dalian Commodities Exchange settled sharply lower following the limit down losses seen at the CBOT on Friday, an analyst said. The bench mark September contract fell RMB/33 to RMB1,654/tonne.