August 13, 2007

 

CBOT Corn Outlook on Monday: 3-5 cents higher on dry weather, soy spillover

 

 

Chicago Board of Trade corn futures are expected to begin day time trading 3-to-5 cents higher as dry weather in the southern U.S. Midwest and spillover strength from higher soybean values is expected to underpin prices at the opening, analysts said.

 

In overnight electronic trading September corn rose 4 1/4 cents to US$3.37 1/4 per bushel and December gained 3 3/4 cents to US$3.54 1/4. e-CBOT volume in December was 6,811 contracts.

 

The lack of rainfall in the southern U.S. Midwest should support corn, as it remains dry in the region, a commission house analyst said. Spillover support from stronger soybean values should also add support as well, the analyst said.

 

In overnight trade, November soybeans gained 11 1/4 cents to US$8.83.

 

Concerns that the weekly crop conditions would report deterioration in conditions are also expected to underpin prices, a trader said. Corn conditions are expected to slip 1-to-3 percentage points this week, continuing their recent declines, the trader said. Last week 56% of the U.S. corn crop was rated in good-to-excellent condition.

 

In the western U.S. Midwest, there is a chance for a few light showers Monday and Tuesday with amounts of 0.10-0.50 inch and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average above normal with highs in the middle 80's to the upper 90's Fahrenheit.

 

In the eastern U.S. Midwest mostly dry conditions are expected Monday with only a few thunder storms in the south. There is a chance for scattered showers with amounts of 0.25-0.75 and locally heavier in northern and eastern areas Tuesday or Wednesday. Temperatures are expected to average well above normal south and near-to-above normal north, Meteorologix Weather said.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal west, near-to-below normal east. Rainfall is expected near-to-below normal.

 

On daily technical charts, December corn closed nearer the session high Friday as market participants were encouraged that futures didn't move to the downside after a slightly bearish U.S. Department of Agriculture crop production report, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at last week's high of US$3.60, with the bears' next downside price objective closing prices below US$3.36.

 

First resistance for December corn is seen at US$3.53 1/2, and then at US$3.60. First support is seen at US$3.48, and then at US$3.45.

 

Large commercial traders trimmed their long CBOT corn futures and options on futures positions by 17,240 contracts and decreased their short positions by 4,912 contracts and are now net short 371,539 contracts as of Aug. 7 the Commodity Futures Trading Commission reported Friday. Large speculative traders trimmed their short futures and options on futures positions by 10,916 contracts and cut their long positions by 2,913 contracts and are now net long 102,253 contracts. Large index funds increased their long positions by 2,339 contracts and trimmed 4 contracts from their short positions and are now net long 369,439 contracts, the CFTC said.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher on spillover from higher soybean values. The May contract rallied RMB/29 at RMB1,590 per metric tonne.

 

Monday, the USDA is scheduled to release the weekly export inspections report at 11:00 a.m. EDT and the weekly crop progress report at 4:00 p.m. EDT.