August 4, 2008
CBOT Corn Outlook on Monday: Lower on follow-through selling, weather
Chicago Board of Trade corn futures are expected to open 3 to 5 cents lower Monday on follow-through selling, outside pressure and favorable crop-growing weather.
In overnight trading, September corn was down 3 1/4 cents to US$5.61 3/4 per bushel, December corn was down 3 1/2 cents to US$5.81 1/2 and March corn was down 3 1/2 cents to US$6.01 1/2.
The market has downside momentum after falling sharply Friday, analysts said, with the December contract ending with its lowest close since March 31. Prices have fallen four consecutive weeks, a trader noted.
Weather, which has from time to time rallied corn during its slump based on concerns about excessive heat, is somewhat bearish, traders said. Although the Midwest will see some heat this week, recent rains will limit the hot weather, and it will be short-lived.
"There's no huge blocking ridge with heat to really threaten pollination at this point," a trader said.
The DTN Meteorlogix forecast calls for mostly dry conditions in the U.S. corn belt through Friday. Northern areas will see scattered showers and thunderstorms Monday and Monday night. Areas across the corn belt will see a few scattered showers and thunderstorms Tuesday and widely scattered showers and thunderstorms through Friday.
After June's historic Midwest flooding raised alarm about this year's crop, the trade is now expecting solid yields above 150 bushels per acre, traders said, due to weeks of favorable crop weather.
The market will also find little help from outside markets Monday, traders and analysts said. Soybeans "got hammered again" in overnight trading, and will pressure corn Monday, a trader said.
Fund liquidation, in corn and other commodities, is weighing on the corn market, traders and analysts said.
Speculative funds cut 21,225 contracts from the CBOT corn short positions and cut 7,811 contracts from their long positions, putting them net long 104,475 contracts, the Commodity Futures Trading Commission reported Friday.
The supplemental commitment of traders report also showed commercial funds cut 43,622 contracts from their long positions and 36,509 contracts from their short positions, putting them net short 363,500 contracts. Index funds cut 15,434 contracts from their long positions and 1,280 contracts from their short positions, putting them net long 372,405 contracts, the CFTC said.
Bears have quickly regained downside technical momentum, and a five-week-old downtrend is in place on the daily bar chart, a technical analyst said.
The next upside price objective is to push and close December prices above solid technical resistance at US$6.00, the technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at the July low of US$5.62 3/4.
First resistance for December corn is seen at US$5.90 and then at US$6.00, the technical analyst said. First support is seen at Friday's low of US$5.81 1/2 and then at US$5.75.