December 28, 2009

 

CBOT Corn Outlook on Monday: Higher following harsh weekend weather

 

 

Chicago Board of Trade corn futures are poised to open higher Monday amid slight support from outside markets and the harsh winter weather that hit over the long holiday weekend.

 

Corn is called 7 to 9 cents higher. In overnight trade, March corn was up 8 1/4 cents to US$4.16 3/4 per bushel and May corn was up 8 1/4 cents to US$4.27.

 

Over the three-day Christmas holiday weekend, much of the upper Midwest saw significant snowfall, more than expected in some areas. This has slowed movement in the cash market, which is supportive to prices in the short-term, analysts said.

 

"Slow farmer movement the last four or five days is tightening the basis," said Jason Roose, analyst with U.S. Commodities in Des Moines. Basis is the difference between cash and futures prices.

 

The harsh weather is also a concern for the crop that has yet to be harvested. Roughly 5% of the crop remains in the field, analysts say, and remains vulnerable to yield losses the longer it stays there, analysts said. The added snowfall will keep farmers out of the fields for some time to come, analysts said.

 

A slightly weaker dollar and stronger crude oil could support corn and other commodities, analysts added.

 

Technically, bulls gained "some fresh upside near-term technical momentum," a technical analyst said.

 

The next upside price objective is to push and close March prices above strong technical resistance at US$4.13 3/4 a bushel, the technical analyst said. 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 Thursday's high of US$4.09 and then at US$4.13 3/4, the technical analyst said. First support is seen at Thursday's low of US$4.03 and then at US$4.00.

 

The market is still widely seen as being rangebound, with prices now reaching the upper end of that range.

 

Light-volume holiday trade is expected to continue this week. Roose said the big looming question is whether funds "step in and do this massive buying" that has been discussed recently. Expectations that index funds would add corn positions to start the new year has underpinned prices lately, according to analysts.