November 23, 2009

CBOT Corn Outlook on Monday: Seen up on follow-through, weak dollar

Chicago Board of Trade corn futures are poised to start firmer Monday on supportive signals from outside markets and follow-through buying from the overnight trading session.

December corn is called to open 4 to 7 cents per bushel higher. In overnight electronic trading, December corn rose 6 1/4 cents to US$3.97 1/4, while March corn gained 5 3/4 cents to US$4.12 3/4.

Weakness in the U.S. dollar and spillover support from gains in CBOT soybeans are expected to help lift corn, traders said. Fund buying also looks as though it will return to the agricultural markets, a CBOT floor analyst said.

"This morning the funds are expected to be back buying corn," a market analyst said. "They have had a pattern of buying early in the week and then that buying dries up by the end of the week. Some traders are trying to take advantage of that tendency and so we are expecting a strong open this morning."

Trading will likely be "kind of thinned out this week" as market participants will take time off due to the Thanksgiving holiday, the floor analyst said. The CBOT is closed Thursday and will have an abbreviated trading session Friday.

"With this being a holiday shortened trading week, look for a high to be developed by early this week, with profit-taking pulling prices off of these highs prior to Thanksgiving as the majority of the trade will desire a four day weekend," Midwest Market Solutions said in a market comment. "This would accomplish the goal of end of the month profit-taking as well as there are only four days remaining in the trading month."

Traders will keep an eye on the U.S. Department of Agriculture's weekly crop progress report, due out at 4 p.m. EST. There is still a good amount of corn to be combined due to wet conditions.

The floor analyst estimated harvest would be about 65% to 70% complete in Monday's report, while Country Hedging estimated it would be 60% to 65% complete. A week ago, harvest was 54% complete, according to the USDA.

There are some worries that "added precipitation" in the U.S. forecast could continue to slow the corn harvest, an analyst said. Rains are expected to return to the Midwest Monday night and Tuesday, especially in western and northern areas, according to private weather firm DTN Meteorlogix.

December corn continues to face resistance around the US$4 level, traders said. The contract has key technical support in the area around US$3.81 to US$3.85, a grain analyst said.

Bulls' next upside price objective is to push and close March corn above solid technical resistance at last week's high of US$4.25, a technical analyst said. The next downside price objective for the bears is to push and close the contract below major psychological support at US$4.00, he said.

First resistance for March corn is seen at Friday's high of US$4.14 3/4 and then at US$4.18, the technical analyst said. First support is seen at last week's low of US$4.05 and then at US$4.02 1/2, he said.