May 4, 2009

 

CBOT Corn Outlook on Monday: Down 2-4 cents on weather, technical weakness

 

 

Chicago Board of Trade corn futures are expected to open lower Monday after the outlook for planting improved over the weekend, analysts said.

 

Corn is called 2 to 4 cents lower. In overnight trading, May corn was down 3 1/4 cents to US$4.03 per bushel, July corn was down 4 1/4 cents to US$4.09 1/2 and December corn was down 4 cents to US$4.29 1/4.

 

Planting weather, which has been the focus of the trade and a driver of gains last week, appears set to improve, with a warmer and drier pattern over the next couple weeks, analysts said.

 

"We're running late but it does look like the weather is going to start to cooperate and open up some windows of opportunity," said Shawn McCambridge, senior grains analyst for Prudential Bache.

 

Although the crop is running behind, getting the crop planted now would be "ideal" for farmers after a wet April, McCambridge said, as there will be "plenty of soil moisture available for the seed once it's planted."

 

Weekend weather was drier than expected in the U.S. corn belt, with rains further south than anticipated, T-storm Weather said. The eastern and southern corn belt have seen the greatest planting delays so far.

 

Soybeans, which gained more than 20 cents overnight, could limit corn's losses, as could the fact that the crop still remains well behind schedule, analysts said. Outside markets, including crude oil and equities, are seen having little effect on early trade.

 

McCambridge added that prices are overbought at the start of the week. Failure to reach Friday's highs in overnight trade is a sign of technical weakness, he said.

 

Trade estimates for the portion of the crop shown planted in Monday crop progress report range from the low 30s to 40% complete. McCambridge estimates progress between 34% and 38%. The U.S. Department of Agriculture will release the report Monday afternoon, after the market closes.

 

Speculative funds cut 5,379 contracts from their CBOT corn long positions and added 4,139 contracts to their short positions, putting them net short 38,083 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also said commercial funds cut 26,926 contracts from their long positions and cut 25,535 contracts from their short positions, putting them net short 135,988 contracts. Index funds added 2,560 contracts to their long positions and cut 1,497 contracts from their short positions, putting them net long 261,785 contracts, the CFTC said.

 

The next upside price objective is to push and close prices above solid technical resistance at the January high of US$4.49 1/4 a bushel, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at US$3.85 a bushel.

 

First resistance for July corn is seen at Friday's high of US$4.15 3/4 and then at the April high of US$4.17 1/2, the technical analyst said. First support is seen at US$4.10 and then at US$4.05.