October 22, 2007

 

CBOT Corn Outlook on Monday: Down 6-8 cents on dollar rebound, outside markets

 

 

Chicago Board of Trade corn futures are expected to begin trading 6 to 8 cents lower, following the tone set in overnight activity with a stronger dollar and weaker outside markets expected to weigh on prices.

 

In overnight electronic trading December corn declined 8 1/4 cents to US$3.62 per bushel and March also fell 8 1/4 cents to US$3.77 3/4. E-CBOT volume in December was 7,284 contracts.

 

Corn will follow the outside markets, which are sharply lower, an analyst said. Metals are down heavily, crude oil futures are suffering strong losses and there is general uneasiness about the equity markets following the sell-off on Friday, the analyst said.

 

Nearby gold is down nearly US$10 per ounce and crude oil is trading more than US$1 lower per barrel.

 

The market could also see some harvest-related pressure, a floor trader said. Analysts expect the U.S. corn harvest at 60% to 65% complete and there could be some producer selling, the analyst said.

 

On daily open auction technical charts, December corn hit a fresh three-week high and ended at a bullish weekly high close, a market technician said. The bulls have gained solid upside near-term technical momentum recently and their next upside objective is to push prices above solid resistance at the September high of US$3.89 1/2, the technician said. The next downside objective for market bears is to close prices below solid support at US$3.60 1/4, per bushel, which would fill on the downside an upside price gap on the daily bar chart.

 

First resistance for December corn is seen at US$3.71, Friday's high and then at US$3.72. First support is seen at US$3.65 and then at US$3.62 1/2.

 

Large commercial traders increased their short CBOT corn futures and options on futures positions by 14,960 contracts and reduced their long positions by 3,793 contracts and are now net short 342,245 contracts as of Oct. 16, the Commodity Futures Trading Commission reported Friday in the commitment of traders' supplemental report. Large speculative traders trimmed their short futures and options on futures positions by 4,964 contracts and increased their long positions by 330 contracts and are now net long 101,419 contracts. Index funds increased their long positions by 3,855 contracts and reduced their short positions by 1,171 contracts and are net long 356,524 contracts, the CFTC said.

 

In other corn news, China's corn output this year is likely to be the same or slightly higher than last year on increased acreage, the Ministry of Agriculture said Monday. Favorable weather in September will help offset a drop in yield of 3% resulting from a severe drought earlier this year, the ministry said in a statement published on its web site.

 

Last year China's corn output was 145.48 million metric tonnes, according to data from China's National Grain and Oils Information Center. The U.S. Department of Agriculture estimated the 2007-08 Chinese corn crop at 143.0 million metric tonnes in October.

 

Philippine end-users are expected to buy around 59,000 metric tonnes of corn in a tender to be held Tuesday, a senior official of the country's National Food Authority said Monday.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark May contract down RMB16 at RMB1,643/tonne.

 

Monday, the U.S. Department of Agriculture 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.