August 18, 2008


CBOT Corn Outlook on Monday: Firmer following overnight gains



Following rises in overnight trade, Chicago Board of Trade corn futures are expected to start the Monday day session on firmer footing, looking to neighboring markets for support.


In overnight trade, corn prices rose with the rest of the grain complex. Nearby September corn gained 11 3/4 cents to US$5.41 1/2 cents a bushel. Most-active December also gained 11 3/4 cents to US$5.61 1/4.


There was little fresh news specifically for corn, but analysts said the strength of Asian markets - particularly palm oil - should give corn an indirect boost. Also, traders said Friday's limit down losses were likely overdone, so corn should rebound to recoup some value.


Farm Futures analyst Bryce Knorr said "corn managed a nice bullish reversal higher on the weekly chart, encouraging ideas an early fall low has been put in. But with little fresh fundamental news to trade today, the market could be looking over its shoulder again."


The dollar, which flexed its muscles all last week, is taking a breather Monday to trade quietly weaker, alleviating some pressure on corn. Crude oil is essentially flat and gold is firmer, holding right at US$800 an ounce.


Private weather firm DTN Meteorologix said the forecast for the corn belt this week is "mostly favorable" for corn and soybean crops in the reproductive to filling stage of development. The firm also said that southern Minnesota is "somewhat too dry." The skies should be clear this week, with the uncertain chance of rainfall in the six-to-10 day period. Bulls, however, said the forecast is too dry for corn, which they said is price-supportive.


This week the markets will look for dispatches from crop scouts who are touring parts of the Midwest on the annual Pro Farmer crop tour. Monday, scouts on the eastern leg have set off from Ohio, while western leg participants are touring South Dakota. Results from the day's journeys will be Monday night.


Friday, the CFTC said in the week ended Aug. 12 index funds cut their net long corn positions by a net 11,649 contracts to stand at a net long 352,244. Traditional funds are still net long, but have cut from that position and added to their short position. Funds are now net long 61,981. Commercials trimmed their net short position by a net 16,492 contracts to sit net long 304,945. Data is from the supplemental report. Through Aug. 12 corn was on a sharp downtrend. Since that time prices have rebounded.


A technical analyst puts first resistance for December corn is seen at US$5.62 3/4 and then at last week's high of US$5.79. First support is seen at Friday's low of US$5.47 1/4 and then at US$5.42.

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