September 15, 2008

 

CBOT Corn Outlook on Monday: Down 12-15 cents; outside markets influence

 

 

Corn futures traded on the Chicago Board of Trade are expected to open lower Monday, in step with overnight price action, as bearish macro-economic influences are poised to weigh on prices in early action, analysts said.

 

Analysts expect corn to open 12 to 15 cents a bushel lower.

 

In overnight electronic trading, December corn was 12 3/4 cents a bushel lower at US$5.50 1/2.

 

Financial woes are seen as a key in impacting prices, as economic jitters associated with news of problems at Lehman Brothers Holdings Inc., Merrill Lynch & Co. and American International Group Inc. are enticing investors into a flight to quality, a CBOT floor analyst said.

 

Bearish macro-economic factors affecting inflationary markets and commodities in general are making it tough for corn to decouple from outside markets despite lingering supply woes.

 

Commodity and inflationary markets have become extremely intertwined in recent years. And the slowing of the U.S. and global economies over the past several months has brought negative effects on prices that have been felt across commodities markets. Outside commodities markets have to some degree become more of a focus of trader attention than the weather has, with traders watching what is happening in crude oil and the U.S. dollar before checking the weather, said Dan Basse, president of AgResource Co.

 

At 9:31 a.m. EDT, crude-oil futures were down US$5.42 a barrel, and the U.S. dollar index was gaining strongly.

 

However, underlying support from Friday's U.S. Department of Agriculture report and concerns about Midwest flooding is seen limiting losses, analysts added.

 

A technical analyst said the next upside price objective for December corn is to push and close prices above solid technical resistance at US$5.80 3/4, which would fill on the upside a downside price gap on the daily chart. The next downside price objective is to push and close prices below solid technical support at last week's low of US$5.31. First resistance for December corn is seen at US$5.75 and then at US$5.80 3/4. First support is seen at US$5.60 and then at US$5.50.

 

The DTN/Meteorlogix Weather Service forecast said heavy weekend rains, some more than 7 inches, may mean flooding of some fields in the region. However, this week looks drier and warmer and fields should slowly dry out. Higher temperatures this week allows crops to continue to mature, Meteorlogix said.

 

USDA is scheduled to release its weekly export inspections report Monday at 11 a.m., EDT, and its weekly crop progress report at 4 p.m. Analysts anticipate crop rating on U.S. corn to hold steady or drop by 2 percentage points.
   

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