October 19, 2009

 

CBOT Corn Outlook on Monday: Seen Up 2-5 cents on overnight, weather woes

 

 

Follow-through buying from the overnight trading session and worries that wetness may continue to delay harvest are expected to support Chicago Board of Trade corn futures at the start of Monday's day session.

 

CBOT December corn is called to open 2 to 5 cents per bushel higher. In overnight electronic trading, CBOT December corn rose 3 1/2 cents to US$3.75 1/2.

 

Traders are keeping a close eye on weather as harvest is already behind schedule due to rain and delayed crop development. Producers did not make much progress last week because of wet and cool conditions.

 

Drier weather in the Midwest "will favor some harvest progress before significant rains during mid week, again delaying the harvest," according to private weather firm DTN Meteorlogix. Drier weather returns toward the end of the week, but more rain is expected early next week, the firm said in a forecast.

 

"This pattern is less than ideal for harvesting and is quite unfavorable for drying down the crops in the fields," according to Meteorlogix.

 

The U.S. Department of Agriculture is slated to issue an update on harvest in its weekly crop progress report, due out at 4 p.m. EDT. A week ago, the corn harvest was 13% complete, compared to the average of 35%.

 

"Corn should open stronger, with the slow pace of harvest remaining an issue," said Bryce Knorr, analyst for Farm Futures. "Traders expect this afternoon's crop progress report to show harvest continues to crawl at a record slow pace, with more rain in the forecast."

 

Another factor on traders' radars is the expected liquidation of positions by Deutsche Bank commodity funds, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. Deutsche Bank is expected to liquidate longs in CBOT corn and wheat to come in line with federal position limits.

 

"Most market participants seem to think that the trade can absorb this selling without much problem," Pfitzenmaier said.

 

Neighboring CBOT soybeans and wheat were higher overnight with corn. Outside markets like the U.S. dollar and crude oil are mixed and not providing much early direction to the grains, Pfitzenmaier said.

 

The bulls' next upside price objective is to push and close CBOT December corn above psychological resistance at US$4.00, a technical analyst said. The next downside price objective for the bears is to push and close the contract below solid technical support at the September high of US$3.47 3/4, he said.

 

First resistance for December corn is seen at US$3.75 and then at Friday's high of US$3.77 3/4, the technical analyst said. First support is seen at US$3.68 1/2 and then at US$3.60, he said.