November 2, 2009

 

CBOT Corn Outlook on Monday: Up 1-2 cents on dollar; weather limits upside

 

 

Chicago Board of Trade corn futures are expected to open slightly higher Monday on a weaker dollar, with drier weather in the U.S. corn belt limiting gains.

 

Corn is called 1 to 2 cents higher. In overnight trade, December corn was up 1 cent to US$3.67 per bushel and March corn was up 1/2 cents to US$3.79 3/4.

 

The dollar has played a dominant role in the market for weeks, and weakness in the greenback could prop up crude oil and other commodities Monday, analysts said.

 

That is prompting higher calls Monday morning, although a trader said "I don't really see all that much to get excited about."

 

After a soggy October and heavy rains last week, a warmer, drier weather pattern is emerging.

 

"This looks like a good week for harvest," Midwest Market Solutions President Brian Hoops said in a morning commentary. "Dry weather is the main feature for the central U.S. crop areas Monday."

 

The improved weather will ease fears about the crop and weigh on the market as more corn enters the pipeline, traders said.

 

It also will give the trade a better idea of the crop's yield, a trader said. He said the trade is probably "slightly leaning" toward a lower crop projection in the Nov. 10 supply and demand report from the U.S. Department of Agriculture.

 

More immediate, the trade is looking ahead to Monday afternoon's crop progress report from the USDA. It is expected to show little harvest progress.

 

December corn on Friday closed lower, near the session low, hit a fresh three-week low, scored a bearish "outside day" down on the daily bar chart and closed at a bearish weekly low close. The corn market bears regained fresh downside near-term technical momentum Friday.

 

The next upside price objective is to push and close December prices above solid technical resistance at US$3.88 3/4 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$3.50 a bushel.

 

First resistance for December corn is seen at US$3.70 and then at US$3.75, the technical analyst said. First support is seen at Friday's low of US$3.63 and then at US$3.60.

 

The managed money category cut both its long and short CBOT corn positions in the week ended Oct. 27, while swap dealers added contracts in both areas.

 

The Commodity Futures Trading Commission's disaggregated commitments of traders report said that managed money cut 11,854 contracts from their long positions and cut 3,572 from their short positions, leaving them net long 180,776 contracts.

 

Swap dealers, meanwhile, added 5,627 contracts to their long positions and cut 701 from their short positions, leaving them net long 284,593 contracts.