June 23, 2008

 

CBOT Corn Outlook on Monday: Down on dry weather, technical weakness

 

 

Chicago Board of Trade corn futures are expected to open 5 cents to 10 cents lower Monday on improving weather and technical weakness, analysts said.

 

In overnight trading, July corn was down 9 1/4 cents to US$7.12 per bushel, September was down 8 1/2 cents to US$7.27, and December was down 8 1/4 cents to US$7.47 1/4.

 

With the Mississippi River cresting below estimates and forecasts calling for continued dry weather, there is a sense that perhaps the worst is over for U.S. corn belt farmers, analysts said.

 

"Some of the comparisons to the 1993 flood haven't measured up," said Shawn McCambridge, senior grain analyst with Prudential-Bache in Chicago. "So there is some sigh of relief that maybe we dodged it a little bit."

 

Technical weakness will also weigh on prices Monday, McCambridge said.

 

But analysts also note that fundamentals remain strong due to the flooding, and said the market will be cautious as the trade tries to assess the damage. The flooding affected several states, most notably Iowa, the top corn-producing state.

 

The trade is looking ahead to the June 30 planted acreage report from the U.S. Department of Agriculture as a gauge of how much crop damage has occurred, although some analysts say it could be longer before a clear picture emerges.

 

The USDA will issue its weekly crop progress report this afternoon. A trader said the crop rated good or excellent could increase slightly.

 

After a mostly dry weekend, DTN Meteorlogix is forecasting continued dry weather through Wednesday. Scattered showers and thunderstorms are forecast for Thursday, and showers and thunderstorms are "likely" on Friday.

 

Some traders said there is growing concern about an effort led by U.S. Sen. Joe Lieberman, I-Conn., to address the role of speculators in the commodities markets, a move that could pressure prices.

 

"They're really putting a push on," a trader said. "This is not just rattling chains."

 

The next upside price objective is to push and close December corn prices above technical resistance at the contract high of US$7.91 1/2, a technical analyst said. The next downside price objective is to push and close prices below solid support at last week's low of US$7.51 1/4.

 

First resistance for December corn is seen at US$7.60 and then at US$7.65, the analyst said. First support is seen at US$7.51 1/4 and then at US$7.50.

 

Speculative funds cut 16,592 contracts from their CBOT corn long positions and added 3,976 contracts to their short positions, putting them net long 198,473 contracts as of June 17, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report showed commercial funds added 27,948 contracts to their long positions and added 15,453 contracts to their short positions, putting them net short 539,371 contracts. Index funds added 10,465 contracts to their long positions and 7,276 contracts to their short positions, putting them net long 430,541 contracts, the CFTC said.