December 31, 2007

 

CBOT Corn Outlook on Monday: Down 1-2 cents on spillover, overnight weakness

 

 

Chicago Board of Trade corn futures are predicted to begin day-session trading 1 to 2 cents lower Monday as weaker prices overnight and spillover from an expected lower opening in soybeans will weigh on prices at the opening, analysts said.

 

An abbreviated trading session, with many traders expected to be absent ahead of the holiday is also expected to limit trading, the analysts added.

 

The CBOT is scheduled to close at 1 p.m. EST ahead of the New Year's holiday and will be closed Tuesday.

 

In overnight electronic trading, March corn fell 1 cent to US$4.51 per bushel. E-CBOT volume in March was 5,380 contracts.

 

Corn should open weaker, a commission house analyst said. Prices were slightly weaker overnight, but soybeans were sharply lower in overnight trade and corn will take its cues from soybeans, the analyst said.

 

Spillover from soybeans will pressure corn with end-of-the month and end-of-the year positioning also expected to limit the upside, a trader said. The grains had a poor close on Friday and should open weaker, the trader added.

 

Rain in Brazil and Argentina over the weekend will also limit any bullish influence, n analyst said.

 

Scattered showers and thunderstorms with amounts of 1.00-to-2.50 inches occurred in Rio Grade do Sol over the weekend and light to moderate rain is forecast through Wednesday, DTN Meteorlogix Weather said. In Argentina, scattered showers occurred through eastern Buenos Aires over the weekend with mostly dry weather elsewhere. Isolates to widely scattered showers are forecast Tuesday extending into Wednesday in parts of the growing region, Meteorlogix Weather said.

 

On daily open auction technical charts, March corn set at a new contract high Friday before closing lower and just above session lows. The primary technical uptrend remains intact on the daily bar chart but corn could be vulnerable to a correction in the near-term, a technical analyst said. Major support is seen around the US$4.39 level, the June high. If the market declines below that level it would open the door for an additional corrective pullback, the analyst said. First resistance is seen at US$4.57, and then at US$4.60.

 

Large commercials traders increased their short CBOT corn futures and options positions by 29,814 contracts and added 15,393 contracts to their long holdings and are now net short 492,098 contracts as of Dec. 24, the Commodity Futures Trading Commission reported Friday in the supplemental commitments of traders report. Speculative traders increased their long positions by 16,975 contracts and added 9,161 contracts to their short positions and are now net long 225,433 contracts the CFTC said. Index funds added 4,103 contracts to their long positions and trimmed 644 contracts to their short positions and are net long 362,971 contracts, the CFTC said.

 

In other corn news, China announced a plan to tax grain exports for corn, wheat, rice and soybeans in 2008 in an attempt to slow a surge in food prices, the Ministry of Finance said Sunday.

 

Futures trading on China's Dalian Commodities Exchange was closed Monday and will reopen Wednesday after the New Year holiday.