December 21, 2009

 

CBOT Corn Outlook on Monday: Mixed; choppy holiday trade expected

 

 

Chicago Board of Trade corn futures are expected to open mixed Monday following overnight losses in what is expected to be light holiday trade.

 

In overnight trade, March corn was up 1/4 cent to US$3.98 per bushel and May corn was flat at US$4.08 1/2.

 

The market has little fundamental news, analysts say, but should have some modest support from stronger soybeans and a weaker dollar, analysts said.

 

The market is entering a holiday mode, which usually involves light volume and choppy trade, analysts say. Prices can be volatile because of the light trade, as it doesn't take a large order to move the market, which can then set off technical buying or selling.

 

Shawn McCambridge, senior grains analyst for Prudential Bache, said that traders will likely maintain their current positions into the new year.

 

"If prices make an unexpected move, they're going to act, but they're not going to initiate new positions," McCambridge said.

 

The harvest continues to struggle to the finish line, with a storm system in the Midwest later this week expected to stall what's left. The U.S. Department of Agriculture's weekly crop progress report, usually released on Monday, has been postponed until Tuesday due to the snowstorm that crippled the east coast.

 

Country Hedging projects the report will show that 95%-96% of the corn crop was harvested as of Sunday, up from 92% the prior week.

 

The bulls' next upside price objective is to push and close prices above strong technical resistance at this week's high of US$4.13 3/4 a bushel.

 

The next downside price objective for the bears is to push and close prices below solid technical support at US$3.90 a bushel.

 

First resistance for March corn is seen at Friday's high of US$4.01 1/4 and then at US$4.05. First support is seen at US$3.93 1/4 and then at US$3.90.

 

Managed money cut short positions in CBOT corn in the week ended Dec. 15, the Commodity Futures Trading Commission said Friday in its disaggregated commitments of traders report. The report showed that the managed money category cut 15,256 contracts from their short positions and added 3,591 contracts to their long positions, leaving it net long 195,688 contracts.

 

Index funds, meanwhile, cut their long positions during that time period, according to the supplemental commitment of traders report. That report showed index funds cutting 4,691 contracts from their long positions, leaving them net long 373,961.