July 28, 2008

 

CBOT Corn Outlook on Monday: Up on hot forecast, outside markets

 

 

Chicago Board of Trade corn futures are expected to open higher Monday on bullish weather prospects and support from outside markets, analysts said.

 

Corn is called 5 to 8 cents higher. In overnight trading, September corn was up 7 1/4 cents to US$5.84 1/2 per bushel, December corn was up 7 1/4 cents to US$6.03 3/4 and March corn was up 9 cents to US$6.25.

 

"After making new lows for the move last week, the market has gone into a consolidation correction phase," said John Kleist, broker and analyst at Allendale. "Now, it's just trying to stand up and look over its shoulder and see what the weather is doing."

 

Traders and analysts said the possibility of excessive heat entering the western corn belt is providing support to the market. This is also true of the potential for excessive rains later in the week, a trader said.

 

The DTN Meteorlogix forecast calls for mostly dry conditions in the U.S. corn belt with a few scattered showers and thunderstorms Monday through Tuesday, followed by episodes of scattered to widely scattered showers and thunderstorms Wednesday through Friday.

 

Influence from outside markets could also be supportive, a trader said.

 

Crude oil is "back a little bit" and the dollar is tapering off, the trader said.

 

Kleist also said a Commodities Futures Trading Commission report shows "regular funds dumping long positions."

 

Speculative funds cut 26,255 contracts from their CBOT corn long positions as of July 22 and cut 1,563 contracts from their short positions, putting them net long 91,061 contracts, the CFTC reported Friday. The supplemental commitments of traders report showed commercial funds added 29,990 contracts to their long positions and cut 15,685 from their short positions, putting them net short 356,387 contracts.

 

Index funds cut 15,583 contracts from their long positions and added 149 contracts to their short positions, putting them net long 386,558 contracts, the CFTC said.

 

The good-to-excellent condition rating of the U.S. corn crop could also pressure the market. The condition ratings will be released at 4 p.m. EDT in the weekly U.S. Department of Agriculture crop progress report. Traders expect the good-to-excellent condition to remain the same or increase up to two percentage points.

 

The next upside price objective is to push and close December prices above solid technical resistance at US$6.00, a technical analyst said. The next downside price objective is to push and close December prices below solid technical support at last week's low of US$5.62 3/4.

 

First support is seen at Friday's low of US$5.88 and then at US$5.80.

 

In export news, U.S. private exporters sold 112,000 metric tonnes of corn for delivery to South Korea in the 2008-09 marketing year, the USDA said Monday.