June 1, 2009

 

CBOT Corn Outlook on Monday: Up 3-5 cents on outside market support

 

 

Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Monday on outside market support and follow-through buying as the market makes new highs.

 

Corn is called 3 to 5 cents higher. In overnight trade, July corn was up 5 1/2 cents to US$4.41 3/4 per bushel and December corn was up 5 1/2 cents to US$4.64 3/4.

 

Outside macro markets will be a key factor Monday, traders said, as a weaker dollar, along with stronger crude oil and equities, boost the market.

 

The market has its own fundamental support, according to some analysts, due to worries about delayed planting and a smaller crop.

 

Corn also has technical momentum, traders said. July corn on Friday closed higher, near the session high, hit a fresh 4 1/2-month high and closed at a bullish monthly high close, a technical analyst said.

 

Views of the recent weather and its effect on the crop are mixed, with some noting the weekend was conducive to planting in many areas while others say there was more rain than expected.

 

The DTN Meteorlogix forecast calls for scattered showers and thunderstorms in the northern half of the U.S. corn belt on Monday and Tuesday. Central and southeastern areas will see periods of rain Wednesday, and scattered showers and thunderstorms will develop from west to central areas on Friday.

 

The trade mostly expects Monday's crop progress report to show planting progress in the low 90s, but estimates range from 91% to 96%. The report from the U.S. Department of Agriculture is also expected to have crop condition ratings for the first time, with estimates for the crop rated good-to-excellent ranging from 60% to 75%.

 

Speculative funds added 14,415 contracts to their CBOT corn long positions and cut 770 contracts from their short positions, putting them net long 104,538 positions, the Commodity Futures Trade Commission said Friday.

 

The supplemental commitment of traders report also showed that commercial funds added 2,191 contracts to their long positions and added 15,978 contracts to their short positions, putting them net short 268,102 contracts. Index funds added 6,539 contracts to their long positions and added 2,176 contracts to their short positions, putting them net long 276,073 contracts, the CFTC said.

 

The bulls' 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, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at US$4.06 1/4 a bushel.

 

First resistance for July corn is seen at Friday's high of US$4.37 and then at US$4.40. First support is seen at Friday's low of US$4.27 and then at last week's low of US$4.21 3/4.