April 3, 2006

 

CBOT Corn Outlook on Monday: Expected flat-1 cent higher

 

 

Corn futures at the Chicago Board of Trade are expected to begin trading flat to one cent higher Monday, after Friday's sharp gains and relatively quiet trading in overnight electronic activity, floor sources said.

 

In overnight e-CBOT trading, May corn rose 1/4 cent to $2.36 1/4, and July corn also increased 1/4 cent to $2.47 1/2.

 

After Friday's big gains, the outlook on corn is mixed, a floor analyst said. It all depends on what the funds want to do after the huge buying in Friday's session, he added.

 

Fund buying on Friday was estimated at 60,000 contracts.

 

According to the CBOT, preliminary trading volume on Friday was 319,852 contracts, which would be a new single day record. The current daily volume record is 314,154 contracts which was set on Feb. 25, 2005.

 

The funds are in the driver's seat, a floor trader said. There isn't much news out, precious metals and crude oil are higher, and if the funds want to buy, corn will go higher, he added.

 

On Friday, the market rallied to the upside after the U.S. Department of Agriculture forecast corn plantings at their lowest level since 2001 at 78.019 million acres. This was sharply below analysts estimates and over 3.5 million acres lower than 2005.

 

Scattered precipitation is expected Monday before mostly drier conditions return to the U.S. Midwest corn growing regions Tuesday and Wednesday, DTN Meteorlogix weather said. There is a chance for scattered showers and thundershowers on Thursday and Friday, with temperatures expected to average near to above normal, DTN Meteorlogix said.

 

Large non-commercial traders are net long 65,160 corn futures and options on futures contracts as of March 31, the Commodity Futures Trading Commission reported Friday.

 

On technical charts, there are now two key near-term technical benchmarks for traders, a market technician said. Strong resistance at Friday's high of $2.43 and the gap on the daily bar chart. If traders can push above $2.43, this would suggest another upward move. And if the bears can fill in on the downside Friday's upside price gap, meaning below $2.28, then the bears would gain downside technical power, the analyst said. First resistance for May corn in pegged at $2.40 and then at $2.43. First support is seen at Friday's low of $2.35 and then at $2.32 1/2.

 

In other corn news, corn futures on China's Dalian futures exchange settled slightly higher on spillover strength from the gains in CBOT corn on Friday.

 

The benchmark September 2006 contract settled RMB1 Higher at RMB1,407/tonne.

 

Asian demand for corn is likely to remain strong in the week ahead as South Korean buyers are likely to continue to importing US. corn, sources said.

 

However, buyers are concerned about the increase in international corn prices amid expectations of a lower 2006 U.S. corn harvest, strong demand for U.S. corn and the absence of Chinese corn exports, sources in Taiwan said.

 

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CDT.