December 4, 2006

 

CBOT Corn Outlook on Monday: Seen 4-6 cents lower, following e-CBOT tone

 

 

Chicago Board of Trade corn futures are forecast to begin day session trading 4 to 6 cents lower Monday following the weak tone established in overnight trade and the lack of market moving news, sources said.

 

In overnight e-CBOT trading, December corn dropped 6 1/4 cents to US$3.67 3/4 cents per bushel and March fell 5 1/4 cents to US$3.81 3/4. e-CBOT volume in March was 7,372 contracts.

 

The corn market is overbought and due for a correction, a commission house analyst said. Technical selling is expected to add to the weakness and the market could extend the losses if the speculative side of the market doesn't support their positions, he added.

 

There was no fresh news out overnight and the bull market needs to have some everyday in order to continue to rally, a floor source said. Without any news, corn could consolidate from its recent new highs, he added.

 

Large commercial traders increased their short corn futures and options on futures positions the Commodity Futures Trading Commission reported Friday. Commercial traders increased their short positions by 27,191 contracts while increasing their long holdings by 9,404 contracts and are now overall net short 201,488 contracts as of Nov. 28. Large speculative traders trimmed their long positions by 21,417 contracts and cut their short positions by 15,100 contracts and are now net long 284,465 contracts, the CFTC said.

 

On day session open auction technical charts, market bulls upside objective continues to be closing prices above major psychological resistance at US$4.00 per bushel in March corn, a technical analyst said. The bears' next near-term downside price objective is closing prices below solid support at US$3.70, the analyst added.

 

First resistance for March corn is seen at Friday's high of US$3.89 1/2 and then at US$3.93. First support is seen at US$3.84 3/4 and then at 3.80.

 

Deliveries posted against the December contract were 1,187 contracts. Large issuers included the customer account of RJ O'Brien, which issued 587 contracts, the customer account of Fortis which issued 200 contracts and the house account of Deutsche Bank which issued 277 contracts. Large stoppers included the house account of Deutsche Bank, which stopped 1,108 contracts.

 

The last trade assigned was Oct. 31.

 

Corn basis bids were mixed Monday morning. Peoria, Illinois was unchanged at 5 cents under the December future.

 

In other corn news, high prices have helped increase Argentina's corn acreage by 50,000 hectares more than previously forecast, the Buenos Aires Cereals Exchange said in its weekly crop progress report Friday.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark May contract down RMB/16 at RMB 1,574/tonne.

 

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report for the week ended Nov. 30 at 10:00 a.m. CST.