November 16, 2009

 

CBOT Corn Outlook on Monday: Higher on weather, outside markets

 

 

Chicago Board of Trade corn futures are expected to open strong on Monday amid supportive outside markets and rainy weather expected to slow the harvest pace.

 

Corn is called 4 cents to 6 cents higher. In overnight trade, December corn was up 6 1/4 cents to US$3.96 3/4 per bushel and March corn was up 6 1/4 cents to US$4.12.

 

Traders said a weaker dollar and stronger crude oil could help set the tone early, as corn and other commodities are expected to climb. But a trader said that outside support is not automatic, as corn prices have in recent days moved regardless of the outside macro market picture. "I'm not day-trading on the dollar anymore," he said.

 

Traders note that after several days of good harvesting weather, conditions are worsening. DTN Meteorlogix said in a forecast that snow and rain across the Midwest, particularly in western areas, will delay harvesting this week, and that "the outlook for next week is showing more rain or snow in the region."

 

As the trade eyes upcoming harvest weather, it is also awaiting word of progress made last week. The U.S. Department of Agriculture will release its weekly crop progress report at 4 p.m. EST. Trade expectations for the harvest completed as of Sunday range from 50% to 60%, still well behind schedule.

 

Analysts note that options expiration is on Friday, and that there is significant open interest in US$4 options, which could make that area a battleground this week.

 

Traders say that that market has little fundamental backing to push much above US$4, although technically it held up well last week.

 

Bulls' next upside price objective is to push and close prices above major psychological resistance at US$4.00 a bushel.

 

The next downside price objective for the bears is to push and close prices below solid technical support at the November low of US$3.59 1/4 a bushel.

 

First resistance for December corn is seen at Friday's high of US$3.94 3/4 and then at US$4.00. First support is seen at Friday's low of US$3.85 1/2 and then at US$3.80.

 

The managed money category cut into its CBOT corn long positions in the week ended Nov. 9, the Commodity Futures Trading Commission said Friday. The CFTC's disaggregated commitments of traders report showed managed money cut 10,863 contracts from their long positions, leaving it with 203,831, and cut 1,538 contracts from their short positions, leaving it with 17,227.

 

Swap dealers, meanwhile, added 9,611 contracts to their long positions, leaving them with 306,485 long contracts versus 7,499 short contracts.