August 10, 2009

 

CBOT Corn Outlook on Monday: Steady-down 2 cents; weather outlook bearish

 

 

Chicago Board of Trade corn futures are expected to open flat to slightly lower Monday as good crop weather continues to keep the market under pressure.

 

Corn is called flat to down 2 cents. In overnight trade, September corn was up 1 1/4 cents to US$3.23 1/4 per bushel but other contracts were lower. December corn was down 1/4 cent to US$3.26 1/4.

 

Weather remains a focus of the market, and "near perfect weather conditions this week should provide much needed heat to most of the Corn belt as the six- to 10-day forecast calls for above normal temps," Country Hedging said in a morning commentary.

 

Any potential crop damage from the heat is being mitigated by rainfall. DTN Meteorlogix said in a forecast that following rains Sunday and today in the north and northwestern areas of the corn belt, eastern and southern areas will see rain tonight and Tuesday.

 

The market's firm tone overnight had little to do with any supportive fundamentals, a trader said. "Corn and wheat were so beat up from last week," a trader said, referring to the markets' sharp drop.

 

DTN senior analyst Darin Newsom said of the September contract's overnight activity, "it seems little more than the wait while the condemned stands above the trap door as traders eye Wednesday's USDA report." He did note, however, "solid commercial buying" supporting the September contract.

 

The trade is awaiting Wednesday's crop production and supply and demand reports from the U.S. Department of Agriculture. Increased production is expected.

 

In export news, the U.S. Department of Agriculture on Monday announced private export sales of 120,000 metric tonnes of corn for delivery to Egypt. Of that total, 60,000 tonnes are for delivery in the 2009-10 marketing year and 60,000 tonnes are for delivery in the 2008-09 marketing year.

 

In other news, speculative funds added 4,311 contracts to their CBOT corn long positions in the week ended Aug. 4 and cut 18,905 contracts from their short positions, putting them net long 10,664 contracts, the CFTC said Friday.

 

The supplemental commitment of traders report also showed that commercial funds cut 7,711 contracts from their long positions and added 20,963 contracts to their short positions, putting them net short 227,082 contracts. Index funds added 1,678 contracts to their long positions and cut 3,381 contracts from their short positions, putting them net long 326,260 contracts, the CFTC said.

 

The corn bulls' next upside price objective is to push prices above solid technical resistance at the August high of US$3.76 a bushel, a 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.