May 21, 2007

 

CBOT Corn Outlook on Monday: Seen 5-7 cents higher following overnight trade

 

 

Chicago Board of Trade corn futures are predicted to start day session trading Monday 5-to-7 cents higher following the tone established in overnight activity on supportive weather forecasts and news that China raised its export taxes, analysts said.

 

In overnight electronic trading, July corn rose 5 3/4 cents to US$3.77 per bushel, September gained 6 1/4 cents to US$3.75 1/4 and December rallied 7 1/4 cents to US$3.73 3/4. E-CBOT volume in July was 4,977 contracts.

 

The weather is a supportive factor, a commission house analyst said. Although there is rain in the forecast it appears to favor the northwestern section of the U.S. corn belt and the eastern belt is dry and could use moisture, he said.

 

News overnight that China raised taxes on a wide variety of products it exports is expected to support prices on ideas that it could lead to reduced Chinese corn exports which is bullish to the corn market, said Brian Hoops, president of Midwest Market Solutions in a note to clients.

 

In addition, the corn market is overdone to the downside and due for a correction, the floor analyst said.

 

In the western U.S. Midwest scattered showers and thunderstorms, 0.30-1.50 inch are forecast for Tuesday and Wednesday, DTN Meteorologix Weather said. Temperatures are expected to average above normal Tuesday and near-to-below normal Wednesday.

 

In the eastern U.S. Midwest, mainly dry weather is expected Tuesday with dry weather or only a few light showers developing in western locations Wednesday. Temperatures will average above normal in the two-day period.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-below normal with rainfall near-to-above normal west and near-to-below east, Meteorologix Weather said.

 

On daily technical charts, July closed lower Friday and traded a mildly bearish "outside day" down on the daily bar chart, a technical analyst said. The downside objective for bears remains closing prices below solid support at US$3.61 per bushel, while the bulls would regain upside momentum by pushing prices above solid chart resistance at US$3.80.

 

First resistance for July is seen at US$3.75, then at US$3.79 3/4, Friday's high. First support is seen at US$3.70 and then at US$3.68.

 

Large commercial traders reduced their short CBOT corn futures and options on futures positions by 10,902 contracts while reducing their long positions by 5,557 contracts and are now net short 412,371 contracts, the CFTC reported Friday. Large speculative traders increased their long futures and options on futures positions by 3,173 contracts and added 7,424 contracts to their short positions and are now net long 135,351 contracts, the CFTC said. Index funds cut their long positions by 4,584 contracts and reduced their short positions by 457 contracts and are now net long 347,668 contracts.

 

In other corn news, the U.S. Department of Agriculture reported that 316,800 metric tonnes of corn was sold to unknown destinations for delivery in the 2007-08 marketing year.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark September contract up RMB2 at RMB1,679 per metric tonne.

 

Monday at 11:00 a.m. EDT the USDA is scheduled to release the weekly export inspections and at 1500 p.m. EDT, the weekly crop progress is scheduled for release.