October 29, 2007

 

CBOT Corn Outlook on Monday: Up 3-5 cents on stronger crude oil, weak dollar

 

 

Chicago Board of Trade corn futures are expected to begin trading 3 to 5 cents higher Monday as higher outside commodity prices and the move to new lows by the U.S. dollar is expected to lead to stronger prices at the opening of day session activity, analysts said.

 

In overnight electronic trading December corn gained 4 cents to US$3.76 per bushel and March also rallied 4 cents to US$3.92 3/4. E-CBOT volume in December was 9,041 contracts.

 

The dollar slumped in value versus other currencies and energy and metals were higher so corn should follow the trend and trade higher as well, an analyst said. It's the same scenario as last week and this should keep the market well supported, the analyst said.

 

The rally in the other markets should bring speculative buying into corn and that will underpin the market technically, the analyst added.

 

On daily open auction technical charts, December corn gapped higher on the daily bar chart, hit a fresh four-week high and closed at a bullish weekly high close, a technical analyst said. Market bulls still have an uptrend in place from the October low and gained more technical momentum on Friday.

 

The bulls next upside objective is to push prices above solid resistance at Friday's high of US$3.74 1/2. The next downside price target for the bears is closing prices below solid support at last week's low of US$3.55 3/4.

 

First resistance for December corn is seen at US$3.74 1/2 and then US$3.80. First support is seen at US$3.69 1/2, Friday's low and then at US$3.67, which is the bottom of Friday's upside price gap on the daily bar chart.

 

Large speculative traders increased their long CBOT corn futures and options on futures positions by 4,521 contracts and reduced their short positions by 1,682 contracts and are now net long 107,622 contracts as of Oct. 23, the Commodity Futures Trading Commission reported Friday in the commitment of traders' supplemental report. Large commercial traders trimmed their long futures and options on futures positions by 4,248 contracts and increased their short positions by 5,061 contracts and are now net short 371,554 contracts. Index funds increased their long positions by 1,978 contracts and reduced their short positions by 1,174 contracts and are net long 357,327 contracts, the CFTC said.

 

In other corn news, Asian buyers of U.S. corn may see higher prices for corn and other commodities on surging crude oil prices and the weak U.S. dollar, analysts said. Higher energy prices are expected to provide price support for corn as it is used to produce ethanol and the weak U.S. dollar is expected to boost demand for U.S. commodities.

 

Corn futures on China's Dalian Commodities Exchange settled sharply higher as the recent gains in crude oil futures boosted speculative buying in corn, an analyst said. The benchmark May contract jumped RMB40 to RMB1,691/tonne.

 

Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 1100 EDT and the weekly crop conditions report at 1600 EDT.