August 24, 2009

 

CBOT Corn Outlook on Monday: Up 1-2 cents; spillover support from soybeans

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Monday thanks mostly to strength in the soybean market, traders said.

 

Corn is called 1 to 2 cents higher. In overnight trade, September corn was up 1 3/4 cents to US$3.23 1/2 per bushel and December corn was up 1 1/2 cents to US$3.27 3/4.

 

The market is expected to take its direction from soybeans, which continued their surge overnight amid strong demand, tight near-term supplies and technical momentum, analysts said.

 

Other outside markets, including higher crude oil, could also lend support, traders said.

 

Although analysts say traders are reluctant to push much lower, fundamentals are mostly considered bearish.

 

"You've got expectations for some semblance of a record yield," a trader said. Those expectations were bolstered by results from a crop tour last week, he said.

 

Overall, analysts say results from last week's Pro Farmer Midwest Crop Tour and Pro Farmer's crop projection released Friday should not have a significant impact on the market.

 

The information and advisory service projected the average U.S. corn yield at 160.1 bushels per acre and total production at 12.807 billion bushels. The U.S. record yield is 160.4 bushels per acre. Pro Farmer's estimates are based in part on the tour findings.

 

Tour officials said that the tour's findings essentially shifted some corn production from the eastern end of the corn belt to the western end, where conditions are particularly strong.

 

Weather remains benign following ample rainfall in the Midwest last week and no signs of frost yet in the forecast, traders said.

 

Traders and analysts note the soybean-corn ratio remains historically high, but some say it could continue to expand, at least in the near-term, due to the bullish soybean market.

 

The next upside price objective is to push December prices above solid technical resistance at last week's high of US$3.45 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below major psychological support at US$3.00 a bushel.

 

First resistance for December corn is seen at US$3.30 and then at Friday's high of US$3.34, the technical analyst said. First support is seen at Friday's low of US$3.21 3/4 and then at US$3.18.

 

Speculative funds cut 7,190 contracts from their CBOT corn long positions and added 13,941 contracts to their short positions, putting them net short 1,485 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed commercial funds added 13,270 contracts to their long positions and cut 11,410 from their short positions, putting them net short 199,868 contracts. Index funds cut 3,496 contracts from their long positions and cut 1,636 contracts from their short positions, putting them net long 325,143 contracts, the CFTC said.