June 22, 2009

 

CBOT Corn Outlook on Monday: Down 8-10 cents on outside pressure, weather

 

 

Chicago Board of Trade corn futures are expected to open lower Monday following sharp losses overnight, as bearish outside markets and good crop weather extend the market's recent slide, traders said.

 

Corn is called 8 to 10 cents lower. In overnight trade, July corn was down 10 3/4 cents to US$3.88 1/2 per bushel, September corn was down 11 1/2 cents to US$3.95 3/4 and December corn was down 11 cents to US$4.08 1/2.

 

Pressure from a stronger dollar and weaker crude oil set the tone overnight and will likely weigh on corn, along with other commodities, at the open. "You can't ignore the dollar," a trader said.

 

Corn is under technical pressure, analysts add, after falling 41 3/4 cents in the July contract during the past six trading days.

 

"We had a poor close technically on Friday. That's number one. Number two, there really wasn't anything to turn that boat around," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Traders and analysts say that the market approached key trend-line support overnight. A trader said that support is around US$3.88 in the July contract and US$4.06 in the December contract.

 

The weather is also bearish for corn, traders and analysts said.

 

The DTN Meteorlogix calls for warmer to hotter temperatures along with periodic thundershower activity this week. This "greenhouse" atmosphere is good for crop development, Roose said. The heat will help dry out some of the excessive moisture much of the corn belt has received this spring, he said.

 

The trade is looking ahead to Monday afternoon's crop progress report, which the trade expecting strong crop condition ratings to continue for corn. The trade is expecting the good-to-excellent rating to hold steady or climb up to two percentage points this week.

 

Speculative funds cut 28,051 contracts from their CBOT corn long positions and added 12,539 to their short positions, putting them net long 91,973 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed that commercial funds added 10,289 contracts to their long positions and cut 38,047 from their short positions, putting them net short 262,727 contracts. Index funds added 13,422 contracts to their long positions and added 6,121 contracts to their short positions, putting them net long 297,147 contracts, the CFTC said.

 

The next upside price objective is to push and close December prices above solid technical resistance at US$4.50 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below psychological support at US$4.00 a bushel.