August 11, 2008

 

CBOT Corn Outlook on Monday: Up slightly as trade awaits USDA report

 

 

Chicago Board of Trade corn futures are expected to open steady to two cents higher Monday on small overnight gains, with quiet trading and evening of positions ahead of Tuesday's crop production report, analysts said.

 

In overnight trading, September corn was up 1 1/2 cents to US$5.00 per bushel, December corn was up 1 3/4 cents to US$5.20 and March corn was flat at US$5.38.

 

The market is awaiting Tuesday's crop production report from the U.S. Department of Agriculture, analysts said. The report is scheduled to be released at 8:30 a.m. EDT on Tuesday.

 

"I think today is about the report, and how you want to be ahead of that," said Don Roose, president of U.S. Commodities in West Des Moines.

 

Analysts expect on average the report to show total corn production at 11.938 billion bushels, up from the government's July estimate of 11.715 billion bushels. Yields are estimated at 152.3 bushels per acre, up from 148.4 bushels per acre in the July report.

 

The outlook for the crop has improved steadily since June's flooding, causing the market to plunge US$2.80 in the December contract. Weather remains a bearish influence, as the crop is now mostly free of concerns of damaging heat.

 

The DTN Meteorlogix forecast calls for mostly dry conditions in the U.S. corn belt all week, although scattered showers will develop in the west Tuesday and isolated showers and thunderstorms favoring western and northern areas are possible Wednesday through Friday. Temperatures are will be near or below normal.

 

Analysts say the continued cooler weather raises some concern about whether the crop will have enough growing degree days before autumn arrives.

 

"If there's an issue, it's the fact that these temperatures continue to be cooler than what we need," Roose said.

 

The next weather threat for the crop is the first frost, which is more of an issue this year because the crop was planted late, analysts said. Roose said, however, there appears to be no correlation between a cooler summer and the first frost of the season.

 

Outside markets, which drove liquidation in corn and other commodities last week, were seen as supportive Monday, with the dollar weaker and crude oil rising on supply concerns stemming from the conflict between Russia and Georgia.

 

Speculative funds cut 18,234 contracts from their CBOT corn long positions and added 8,925 contracts to their short positions, putting them net long 77,316 contracts, the Commodity Futures Trading Commission reported Friday.

 

The commitments of traders report also showed commercial funds added 14,696 contracts to their long positions and cut 27,245 contracts from their short positions, putting them net short 321,559 contracts. Index funds cut 3,177 contracts from their long positions and added 4,464 contracts to their short positions, putting them net long 364,764 contracts, the CFTC said.

 

The next upside price objective is to push and close prices above solid technical resistance at US$5.50, a technical analyst said. The next downside price objective for the bears is to push and close prices below major psychological support at US$5.00.

 

First resistance for December corn is seen at US$5.25 and then at US$5.30, the technical analysts said. First support is seen at the March low of US$5.13 1/4 and then at US$5.00.

 

In international news, China exported 10,000 metric tonnes of corn in July, down sharply from 251,308 tonnes in the same month last year, according to preliminary data issued Monday by the General Administration of Customs.