November 17, 2008
CBOT Corn Outlook on Monday: Mixed after two-sided trade overnight
Chicago Board of Trade corn futures are expected to open mixed Monday following two-sided action overnight as the market looks to uncertain outside markets for direction.
In overnight trading, December corn was flat at US$3.80 1/4 per bushel, March was up 1/4 cent to US$3.97 1/4 while May corn was down 1/2 cent to US$4.08.
The trade was expecting a weaker performance for corn overnight, because of a stronger dollar and bearish sentiment on the world economy, but losses were limited, a trader said. Outside markets, including crude oil, are providing limited direction Monday morning, traders said.
Country Hedging said in a morning commentary that good harvest activity should push harvest totals in Monday's USDA crop progress report closer to the five-year average, with most estimates calling for more than 80% completed, up from 71% last week.
Although the U.S. corn belt saw more precipitation over the weekend, the DTN Meteorlogix forecast calls for favorable weather for the harvest across the Midwest during the next several days, with mostly dry conditions through Friday.
"The ground is freezing up, and that will allow machinery to get out into the fields and clean up some of the residual harvest," a trader said.
But analysts also say that the late harvest is also offering support, as it prompts ideas that some corn will be left out in the fields.
Dry weather in South America, particularly in Argentina, could begin providing more support to the market, traders said. The drought is hindering corn planting, they said.
Technically, "it's a rangy market," a trader said. He sees corn trading between US$3.60 and US$3.90.
The next downside price objective is to push and close December prices below solid technical support at last week's low of US$3.60 1/4. The bulls' next upside price objective is to push and close prices above psychological resistance at US$4.00.
First resistance for December corn is seen at Friday's high of US$3.86 1/4 and then at last week's high of US$3.89 1/2. First support is seen at Friday's low of US$3.70 1/2 and then at US$3.63 1/4.
On Friday, private analytical firm Informa Economics estimated both corn and soybean plantings would increase in the U.S. in 2008. Informa projected corn plantings at 86.8 million acres and soybean plantings at 77.2 million acres.
Farm Futures noted that open interest in CBOT corn dropped Friday despite a rally, with funds continuing to shed positions in light of the weak global economy.
Speculative funds cut 4,194 contracts from their long positions and added 17,651 contracts to their short positions, putting them net short 44,384 contracts, the Commodity Futures Trading Commission reported Friday.
The weekly commitment of traders report showed commercial funds added 8,421 contracts to their long positions and cut 26,659 contracts from their short positions, putting them net short 118,553 contracts. Index funds cut 7,754 contracts from their long positions and added 6,474 contracts to their short positions, putting them net long 226,007 contracts the CFTC said.