December 7, 2009

 

CBOT Corn Outlook on Monday: Down 2-4 cents amid technical pressure

 

 

Chicago Board of Trade corn futures are expected to open 2 to 4 cents lower Monday following overnight losses and amid technical pressure.

 

In overnight trade, December corn was down 3 1/4 cents to US$3.70 1/2 per bushel, March corn was down 3 cents to US$3.85 1/2 and May corn was down 2 1/2 cents to US$3.96 1/2.

 

Traders and analysts said the market is looking bearish technically after Friday's slump, and that fundamentals are weak as well. Friday's slide of more than 12 cents caused technical chart damage, negating an 11-week-old upward trend, a technical analyst said.

 

A stronger dollar could also keep the market under pressure, traders said. Unlike soybeans, which were higher overnight, the corn market can "least afford" a rally in the dollar, because it is so dependent on keeping U.S. prices competitive in the export market, a trader said. Export sales have been weak in recent months.

 

Traders add that liquidation from trend-following funds and end-user selling has weighed on prices in recent days.

 

Analysts point out that what remains of the corn harvest is being stalled again as snowy weather moves across the Midwest. Snowfall late Sunday into Monday will be followed by a more significant storm Tuesday into Wednesday.

 

Traders and analysts say that roughly 10% of the corn harvest remains unharvested. The U.S. Department of Agriculture will release its weekly crop progress update Monday at 4 p.m. EST.

 

While the market is expected to open weak, "if the soybeans rally strong enough, they might drag corn along too," a trader said.

 

The next upside price objective is to push and close prices above solid technical resistance at US$4.12 a bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at the November low of US$3.72 1/2 a bushel.

 

First resistance for March corn is seen at US$3.95 and then at US$4.00. First support is seen at Friday's low of US$3.88 and then at US$3.85.

 

Managed money piled on the long positions in the week ended Dec. 1, the Commodity Futures Trading Commission said Friday in its disaggregated commitments of traders report. The managed money category added 26,187 contracts to their long positions, for a total of 233,327, and cut 2,777 contracts from their short positions, leaving them with 20,405. Swap dealers added 5,878 contracts to their long positions during that time period and cut 913 contracts from their short positions.

 

The March contract gained 11 cents during that time period. However, it then lost 26 cents in the ensuing three days.