August 27, 2007

 

CBOT Corn Outlook on Monday: Down 6-8 cents; following overnight theme

 

 

Chicago Board of Trade corn futures are expected to start Monday's day session on the defensive, in step with overnight declines as the absence of fresh supportive features attracts selling pressure, analysts said.

 

Analysts expect corn to open 6 to 8 cents lower.

 

In overnight electronic trading, September corn was 7 3/4 cents lower at US$3.33 3/4, and December corn was 8 cents lower at US$3.50 3/4.

 

A quiet news front is seen attracting carryover weakness from overnight trade, with overbought conditions after a recent rally and expanding harvest activity in the southern crop belt expected to lend pressure to prices, analysts said.

 

Otherwise, traders are expected to keep an eye on technical patterns for signs of direction in the absence of fresh news to spur activity, analysts added.

 

A technical analyst said late last week's price action did produce a buying exhaustion tail on the daily bar chart, whereby the bulls became exhausted at higher price levels and then prices backed well off the weekly high. Last week's high of US$3.72 basis December futures is strong overhead resistance for the bulls to overcome. The next downside price objective for December corn is to close prices below solid support at US$3.50.

 

First resistance for December corn is seen at Friday's high of US$3.62 1/2 and then at US$3.65. First support is seen at Friday's low of US$3.58 and then at US$3.55.

 

The DTN Meteorlogix Weather Service forecast said the U.S. Midwest has scattered thunderstorm activity forecast for the middle of the week, but the rains are not expected to be very heavy. Weekend showers over Missouri and central Illinois were favorable but more rain is still needed, Meteorlogix said.

 

Meanwhile, the U.S. Department of Agriculture announced Monday private export sales of 120,000 metric tonnes of corn for delivery to Egypt in the 2007-08 marketing year.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 354,028 combined CBOT corn futures and options contracts as of Aug. 21, down from 362,457 the prior week. Traditional large speculative traders were net long 111,676 contracts compared with net longs of 109,669 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 358,976 contracts, down from the previous week's 361,564 contracts.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11 a.m. EDT (1500 GMT) and weekly crop progress reports at 4:00 p.m. EDT.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled higher. The benchmark May 2008 contract settled RMB8 higher at RMB1,589/tonne.