April 7, 2008

 

CBOT Corn Outlook on Monday: Up 3-5 cents on wet weather, speculative buying

 

 

Chicago Board of Trade corn futures are expected to open 3-5 cents a bushel higher on speculative buying as another round of wet weather looks to delay early planting efforts and competition for planted acres with soybeans heats up, analysts said Monday.

 

Overnight, May corn rose 2 1/2 cents to settle at US$6.00 1/2, and December added 5 3/4 cents to US$6.14 1/2 a bushel.

 

Wet weather again this week, especially in the eastern Midwest, is expected to keep many farmers out of the fields.

 

Chances for light to moderate showers with 0.25-1.00 inch of rain and locally heavier amounts are forecast for Tuesday and Wednesday in the eastern corn belt. Rain and thunderstorms are also expected Thursday into Friday, private forecaster DTN Meteorlogix said.

 

In the western belt, light to moderate rain with 0.25-0.75 inch is forecast for southern and eastern areas on Tuesday, with drier conditions on Wednesday. Moderate to heavy precipitation is likely for southern and eastern areas of the western belt Thursday into Friday, Meteorlogix said.

 

Some forecasts hinted at a drying pattern for next week, but there is enough disagreement among the weather models that the uncertainty will likely keep sellers on the sideline, particularly after a bullish crop and stocks report from the U.S. Agriculture Department that was seen last week, said Bryce Knorr, senior editor at Farm Futures.

 

A continuation of the wet weather pattern, however, could push more acres into soybeans amid fears of not getting the corn planted in time to produce optimal yields.

 

Gains in precious metals and crude oil Monday morning are expected to be supportive for corn.

 

Commodity funds increased CBOT corn longs by 1,513 lots in the week to April 1, taking the overall net-long position to 146,577, from 146,148 the previous week, according to the Commodity Futures Trading Commission's commitment of traders supplemental report. Funds also increased shorts by 1,083 contracts. As a percent of open interest, funds are 6.8% net-long, down slightly from 7.1% last week.

 

In other news, about 25% of the Argentine corn harvest is complete as of Sunday, which is about 4 percentage points ahead of pace. The Argentine government estimates the harvest at 20.5 million tonnes, after early drought had cut yields in some areas but recent rainfall has helped the crop recover.

 

Technically, July corn bulls still have a solid near-term technical advantage, amid no early technical clues that a market top is close at hand, an analyst said. The bulls' next upside price objective is to push and close prices above resistance at US$6.25. The next downside price objective for the bears is to push and close prices below solid support at US$5.91 1/2.

 

First resistance for July corn is seen at the contract high of US$6.15 and then at US$6.20. First support is seen at Friday's low of US$6.09 and then at US$6.05.