April 21, 2008

 

CBOT Corn Outlook on Monday: Down 6-8 cents; planting outlooks, technical sales

 

 

Corn futures on the Chicago Board of Trade are expected to open Monday's day session lower, in tune with overnight trade, pressured by improved planting outlooks and technical weakness, analysts said.

 

Analysts expect corn to open 6 to 8 cents lower.

 

In overnight electronic trading, July corn was 8 1/2 cents lower at US$6.04 1/2, and December corn was 8 1/4 cents lower at US$6.14 1/2.

 

The U.S. corn belt didn't receive the excessive rainfall expected over the weekend, and with warmer temperatures for the region forecast for the next week, farmers are expected to increase planting progress, grain analysts said.

 

In the big picture, planting concerns remain supportive, but in the short term, opportunistic planting outlooks for the next week or two and the absence of fresh fundamental news to feed market bulls should shake a few longs out of the market, a CBOT floor analyst said.

 

Technically, the market has settled into a sideways trading range, and until new fundamental developments arise, traders are anticipated to take a cautious approach, analysts said.

 

Meanwhile, outside market influences will continue to influence prices, with record high moves in crude oil and higher metal futures overnight limiting downside pressure, traders said. Crude oil and silver futures have retreated from the overnight advances, while gold futures remain firm.

 

A technical analyst said market bulls still have the near-term technical advantage amid no strong technical clues that a market top is imminent. The next upside price objective for July corn is to push and close prices above resistance at the contract high of US$6.28 1/4. The next downside price objective is to push and close prices below solid support at US$5.96 3/4.

 

First resistance for July corn is seen at Friday's high of US$6.16 1/2 and then at last week's high of US$6.22 1/2. First support is seen at US$6.10 and then at US$6.07.

 

The DTN Meteorlogix Weather Service forecast said rainfall over the eastern and southern Midwest wasn't as heavy as expected over the weekend, but still enough to keep field work slow. This pattern appears to be wetter for the western Midwest and the west portion of the eastern Midwest, with field work delays continuing. The next chance for showers in the east and south doesn't occur until late this week, Meteorlogix forecasts.

 

Large funds increased longs by 18,776 contracts in CBOT corn futures and options in the week to April 15, taking the overall net-long position to 196,850, from 177,194 contracts the previous week, the CFTC's commitments of traders report shows. At the same time, funds slightly decreased shorts by 880 lots. As a percent of open interest, funds are 8.6% net-long, up from 8.1% last week. Index traders increased length slightly by 2,021 contracts, taking their net-long position to 445,179, or 19.6%, from 444,337, or 20.2% last week. Commercials, meanwhile, got increasingly short, boosting their net-short position to 557,385 lots, from 545,352, the CFTC says.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT.

 

In overseas markets, South African white corn prices fell by the daily limit Monday, pressured by the strengthening rand and Friday's drop on CBOT corn prices, traders said. The most active white corn for July delivery contract fell 45 rand to ZAR1,828 (US$236) a metric tonne, and May white corn fell by the same margin to ZAR1,830 a tonne.