April 13, 2009

CBOT Corn Outlook on Monday: Down 5-7 cents on mostly bearish outside markets

Chicago Board of Trade Corn futures are called to open 5 to 7 cents lower, following overnight electronic trading and amid mostly bearish outside markets early Monday. Crude oil prices are lower, while the U.S. stock indexes are also weaker in early trading. The value of the U.S. dollar is solidly lower against most of the other major currencies, which could somewhat limit selling interest in corn, said an analyst.

May corn was last traded down 6 1/2 cents at US$3.83 3/4 in overnight electronic trading.

"I don't see a lot (of fresh market-making fundamental news) early this morning," said Victor Lespinasse, veteran market analyst with www.grainanalyst.com. He said traders are keeping an eye on Corn Belt weather.

Weather in the U.S. Corn Belt is becoming more important by the day, as planting season is soon approaching. Rain showers are forecast for the central and southern Corn Belt to start the week, and are expected to continue into Tuesday. Mostly dry conditions will prevail Wednesday, with showers re-developing in the western Corn Belt on Thursday. Friday is forecast to be dry in the Corn Belt. The wet weather will delay corn planting efforts in the south, according to Meteorlogix weather.

Any sustained wet Corn Belt weather early in the planting season is likely to be bullish for new-crop corn, as farmers could switch intended corn acres to soybeans due to the optimum corn-planting window closing, Lespinasse said.

Monday afternoon's crop progress report from USDA will be closely scrutinized by traders. However, it's not believed a U.S. corn-planting figure will be issued this week.

Technically, May corn last Thursday closed at a bearish weekly low close and scored a bearish "outside day" down on the daily bar chart. Corn sold off Thursday despite a friendly USDA supply and demand report issued Thursday morning and despite mostly bullish "outside markets" - a stronger U.S. stock market and higher crude oil prices. The fact that corn sold off Thursday in the face of bullish factors is a bearish omen for the corn market. The bulls' next upside price objective is to push and close prices above solid technical resistance at the April high of US$4.07 1/2. The next downside price objective for the bears is to push and close prices below solid technical support at US$3.76 3/4 a bushel.

In the latest weekly commitment of traders report issued by the Commodity Futures Trading Commission, commercials increased their net short positions by 8,841 contracts, to 509,808. Meantime, large speculators increased their net long positions in corn by 1,680 contracts, to 96,099. Index funds also increased their net long positions by 4,233 contracts, to 293,981 contracts in the latest reporting week.