August 3, 2009

 

CBOT Corn Outlook on Monday: Up on outside support; weather eyed

 

 

Chicago Board of Trade corn futures are poised to climb on Monday's open on supportive outside markets and growing uncertainty about the weather outlook.

 

Corn is called 10 cents to 12 cents higher. In overnight trade, September corn was up 11 1/4 cents to US$3.50 3/4 per bushel and December corn was up 11 3/4 cents to US$3.61 1/4.

 

Outside markets are pointing the market higher Monday morning, with higher crude oil and soybeans expected to continue their surge, analysts said.

 

The falling U.S. dollar is driving commodities across the board higher, said Jason Roose, analyst for U.S. Commodities in Des Moines.

 

The trade is eyeing the potential emergence of adverse crop weather, although views on the threat are mixed. DTN Meteorlogix said in a forecast that a ridge of high pressure in the western U.S. will move east next week, bringing hotter weather to the U.S. corn belt. The weather service considers the forecast "generally favorable" for corn, however, as periodic rain in the near-term gives way to more heat in the 6-day to 10-day period, which should boost crop development.

 

Roose said the weather is starting to get traders' attention, but the effect of the oncoming heat will vary depending on the region.

 

"Some areas say it's welcome," Roose said. "Some areas say it's going to cause damage."

 

Longer-term, Drew Lerner, owner of World Weather Inc., said in a report that he "fully expects another wave of colder than usual weather to come along in the second half of August."

 

Cooler weather is generally seen as favorable, although Country Hedging says in a morning commentary that "frost concerns are beginning to emerge with the crop needing time to reach full maturity because of the cool growing season."

 

Speculative funds cut 1,249 contracts from their CBOT corn long positions and cut 9,098 contracts from their short positions, putting them net short 12,553 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed that commercial funds cut their long positions by 32,426 contracts and cut their short positions by 1,259 contracts, putting them net short 198,407 contracts. Index funds added 11,019 contracts to their long positions and added 4,960 contracts to their short positions, putting them net long 321,201 contracts, the CFTC said.

 

A technical analyst said that if gains can be sustained above the July 15 high of US$3.49 1/4 per bushel in the December contract, "it would suggest that a bottom is forming on the daily chart."

 

The next upside price objective is to push prices above solid technical resistance at US$3.56 3/4 a bushel, which would fill on the upside a downside price gap on the daily bar chart, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at the contract low of US$3.14 3/4 a bushel.