November 9, 2009

 

CBOT Corn Outlook on Monday: Seen up on supportive outside markets

 

 

Chicago Board of Trade corn futures are expected to start 3 to 5 cents per bushel higher Monday on spillover strength from outside markets and amid positioning ahead of crop reports.

 

In overnight electronic trading, CBOT December corn gained 5 cents to US$3.72 a bushel.

 

A sinking U.S. dollar and climbing crude oil and precious metals are setting a bullish tone for the grains, traders said. There should be continued support from the outside influences after corn jumped in the overnight session, along with neighboring CBOT soybeans and wheat, they said.

 

"The U.S. dollar was sharply lower overnight, causing funds to rebalance their portfolios by buying commodities against the falling dollar," said Brian Hoops, president of Midwest Market Solutions.

 

Traders are expected to even up positions ahead of Tuesday's U.S. Department of Agriculture crop-production and supply/demand reports. There is uncertainty about what the reports will say, as wet weather has delayed the U.S. corn harvest significantly.

 

The average of analysts' estimates for corn production is 12.995 billion bushels, down slightly from the USDA's October estimate of 13.018 billion, according to a Dow Jones Newswires survey. The average of estimates for yield is 163.7 bushels per acre, down from the October USDA estimate of 164.2 bushels.

 

"The USDA will not have the benefit of a large amount of harvested data for this report," Hoops said.

 

Traders will receive an update on harvest progress in the USDA's weekly-crop progress report, due out at 4 p.m. EST. Hoops estimated corn harvest at 30% to 35% complete, while AgResource Co. pegged harvest as 38% to 42% complete and Morgan Stanley said it should be about 35% complete.

 

Weather for harvest looks mostly favorable this week after a productive weekend, traders said. Conditions look "pretty windy and pretty mild," a CBOT floor analyst said.

 

"For this time of year, this weather pattern is as good as can be expected for drying corn in the fields and for any harvest activities," private weather firm DTN Meteorlogix said in a forecast.

 

Gains on Monday would follow losses Friday. Bulls' next upside price objective is to push and close CBOT December corn above major psychological resistance at US$4, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.59 1/4, he said.

 

First resistance for December corn is seen at US$3.70 and then at US$3.75, the analyst said. First support is seen at Friday's low of US$3.66 and then at US$3.63, he said.