May 18, 2009


CBOT Corn Outlook on Monday: Down 4-6 cents as eastern corn belt dries out



Chicago Board of Trade corn futures are expected to open lower Monday on improving weather conditions that are expected to dry out parts of the corn belt and allow for planting.


Corn is called 4 to 6 cents lower. In overnight trade, July corn was down 6 3/4 cents to US$4.10 1/2 per bushel and December corn was down 6 3/4 cents to US$4.31 3/4.


An end to the consistent soggy weather in the U.S. corn belt this week dragged the market lower Friday, and remains a bearish influence Monday, analysts said.


The DTN Meteorlogix forecast calls for the "driest week of the growing season to date."


"This will allow for the wet areas of the southern and eastern Midwest to dry out and the some increase in planting especially over higher ground and sandier soils," the forecast states.


However, analysts note that some of the wettest areas need several days to dry out after last week's rain before planting can resume. Weather forecasts indicate the possibility of rain returning next week.


The eastern corn belt has lagged behind in planting all season, and farmers in Illinois and Indiana were pushed further back late last week by heavy rains.


The Commodity Futures Trading Commission showed a "huge" shift to long positions in the market for the week ended May 12, analysts said. Speculative funds added 35,114 contracts to their CBOT corn long positions and cut 20,680 from their short positions, putting them net long 64,465 contracts, the CFTC said.


The supplemental commitment of traders report also showed that commercial funds added 23,398 contracts to their long positions and added 70,995 contracts to their short positions, putting them net short 235,289 contracts. Index funds cut 2,966 contracts from their long positions and cut 830 contracts from their short positions, putting them net long 268,139 contracts, the CFTC said.


"We've got a big chunk of new longs that are well out of pocket coming into this morning's session," said John Kleist, broker/analyst for Allendale. "If this market doesn't find its footing, that could promote long liquidation of the funds."


Bulls still have the overall near-term technical advantage in corn, but did fade Friday and need to show fresh power soon, a technical analyst said.


The next upside price objective is to push and close July prices above solid technical resistance at last week's high of US$4.34 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$4.00 a bushel.


First resistance for July corn is seen at US$4.20 and then at US$4.25. First support is seen at Friday's low of US$4.16 and then at US$4.10.


The trade is looking ahead to the U.S. Department of Agriculture's crop progress report, which will be released after the market closes Monday.