October 5, 2009

 

CBOT Corn Outlook on Monday: Down slightly; big crop weighs

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Monday as benign weather and large crop expectations weigh on the market.

 

Corn is called 1 to 2 cents lower. In overnight trade, December corn was down 1 1/2 cents to US$3.32 per bushel and March corn was down 1 1/2 cents to US$3.45.

 

As October progresses, the market is shifting its attention to the harvest and away from whether the crop is in danger from frost, said Shawn McCambridge, senior grains analyst with Prudential Bache. He noted that long-range forecasts calling for a freeze should not be enough to rally the market.

 

"By that time we're going to be pretty well safe from significant production losses," McCambridge said.

 

DTN Meteorlogix said in a forecast that "cool, unsettled" weather this week will be unfavorable for corn maturation, and that the potential for the first widespread freeze of the season in the Midwest could damage any crop that's not mature.

 

But forecasters also say that a drier pattern should emerge next week that will aid in drying before the harvest.

 

The corn bulls' next upside price objective is to push December 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 US$3.10 a bushel.

 

First resistance for December corn is seen at US$3.40 and then at US$3.45. First support is seen at Friday's low of US$3.31 3/4 and then at US$3.25.

 

The managed money category sharply reduced its CBOT corn short positions for the week ended Sept. 29, according the CFTC disaggregated commitments of traders report. The report showed that managed money cut 25,232 contracts from short positions while reducing long positions by 2,108 contracts, leaving the category net long 93,269 contracts.

 

The activity came as the market remained firm thanks to fund-buying, despite bearish fundamentals, analysts said.

 

"We saw the market starting to correct these overbought ideas last week," McCambridge said. "And (Monday is) just a continuation of that."