July 13, 2009

 

CBOT Corn Outlook on Monday: Down 2-3 cents; crop weather looks favorable

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Monday following overnight losses as good crop-growing weather continues to weigh on prices.

 

Corn is called 2 to 3 cents lower. In overnight trading, September corn was down 4 cents to US$3.24 1/4 per bushel and December corn was down 3 3/4 cents to US$3.34 1/4.

 

The crop is starting to enter its key pollination period and should have few problems from the weather throughout the U.S. corn belt, according to forecasts. DTN Meteorlogix says in a forecast that "hot temperatures, if any, will be brief and mainly confined to west and south areas," and rainfall coverage is expected to be widespread this week.

 

"Lack of a weather threat and the larger supplies forecast by USDA keep traders back on their heels," Farm Futures senior editor Bryce Knorr said in a market commentary.

 

Friday's supply and demand report projected significantly higher new crop ending stocks, as expected, due to the large crop that is anticipated. Demand also remains a problem, analysts said, as the livestock industry continues to struggle. Country Hedging also noted in a Monday commentary that ethanol margins "decreased significantly last week."

 

Speculators cut 5,649 from their CBOT corn long positions and added 11,983 contracts to their short positions, putting them net long 18,716 contracts as of Tuesday, the Commodity Futures Trading Commission said Friday.

 

A trader said the report was discouraging for bulls. "Many thought they had flattened out by Tuesday," he said. The report indicates funds may still have some long positions to liquidate, he said.

 

The supplemental commitment of traders report also showed that commercial funds cut 2,244 contracts from their long positions and cut 22,822 contracts from their short positions, putting them net short 196,261 contracts. Index funds added 5,607 long positions and added 999 short positions, putting them net long 309,775 contracts, the CFTC said.

 

The trader said the only positive thing in the market at the moment is firm cash prices, as producers are sitting on their supplies.

 

The next upside price objective is to push and close December prices above solid technical resistance at last week's high of US$3.58 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below strong longer-term technical support at US$3.25 a bushel.

 

First resistance for December corn is seen at US$3.40 and then at Friday's high of US$3.45, the technical analyst said. First support is seen at Friday's contract low of US$3.28 and then at US$3.25.

 

In export news, South Korea's Major Feedmill Group has purchased 110,000 metric tonnes of corn in a tender concluded late Friday, a trader with the company said Monday.

 

Also, Zambia's Food Reserve Agency marked the start of the country's 2009-10 corn marketing season Monday by issuing a tender to buy up to 110,000 metric tonnes of corn by September for its strategic reserves.