November 10, 2008
CBOT Corn Outlook on Monday: Up 8-10 cents on china stimulus, USDA report
Chicago Board of Trade corn futures are expected to open 8-10 cents higher Monday on follow-through support as China's announcement of an economic stimulus package lifts commodities, traders said.
Traders added that Monday's U.S. Department of Agriculture crop production and supply and demand reports were slightly supportive, but would not be a significant factor in the market.
In overnight trading, December corn was up 12 cents to US$3.87 1/2 per bushel and March was up 11 cents to US$4.04 1/2.
Outside markets are expected to provide support, with crude oil rising along with other commodities, largely based on China's announcement of a US$586 billion stimulus package.
"The idea is that demand is going to recover," said Vic Lespinasse, analyst for grainanalyst.com. "And not just for grains, but commodities in general."
But a trader said that while China's announcement was unquestionably bullish, he was not "juiced up" for significant, long-term gains.
"Can the euphoria created by the stimulus package actually last?" he said.
The USDA on Monday cut corn production slightly. The USDA estimated production at 12.020 billion bushels, compared to the agency's October estimate of 12.033 billion and the average trade estimate of 12.066 billion. Yield was pegged at 153.8 bushels per acre, down slightly from the USDA's October estimate of 153.9 bushels, and down from the trade's estimate of 154.3 bushels.
A trader said the report might have shown the effects of a slow, delayed harvest and possible crop losses.
Corn carryout was estimated at 1.124 billion bushels, up from the USDA's October estimate of 1.088 billion. The average trade estimate was 1.160 billion.
But analysts also noted that world ending stocks were cut, which could put some pressure on the market Monday.
"It's six of one and a half-dozen of the other," a trader said.
The DTN Meteorlogix forecast calls for rain to move into the U.S. corn belt Tuesday and Wednesday, further delaying harvest. The long range outlook is more favorable, with colder and drier conditions expected.
Speculative funds added 2,868 contracts to their CBOT corn short positions and cut 188 contracts from their long positions, putting them net short 22,539 positions, the Commodity Futures Trading Commission reported Friday.
The supplemental commitment of traders report also showed commercial funds added 712 contracts to their short positions and cut 3,240 contracts from their long positions, putting them net short 153,633 contracts.
Index funds added 1,811 contracts to their short positions and cut 3,722 contracts from their long positions, putting them net long 240,236 contracts, the CFTC said.