October 13, 2008

 

CBOT Corn Outlook on Monday: Up 6-7 cents on outside markets, weak dollar

 

 

Chicago Board of Trade corn futures are expected to rebound Monday on signals from outside markets, analysts and traders said.

 

Corn is called 6 to 7 cents higher, as U.S. stock markets rally in early trading and the dollar weakens as crude and gold find strength. CBOT trade limits expanded - up to 45 cents for corn and US$1.05 in soybeans - after both commodities locked limit down on Friday.

 

In overnight trading, December corn rose 6 1/4 cents to US$4.14 1/2 per bushel and March corn was up 7 1/4 cents to US$4.55 1/2.

 

"After suffering their worst weeks ever, global markets are on the rise this morning, buoyed by meetings over the weekend aimed at stabilizing the world's banking system," says Farm Futures Senior Editor Bryce Knorr. "Leaders are promising to recapitalize ailing lenders, though details and actual action remain sketchy."

 

"Corn should open higher this morning, after a quiet short-covering rally in fairly modest volume overnight," Knorr said. "Corn opened the overnight session lower on follow-through selling from Friday's limit-down losses. December futures traded as low as US$3.9825 - losing half its contract high - before rising crude-oil prices finally convinced traders to reverse positions and buy."

 

Market bears will be gunning to finish the day's trade below the overnight resistance low of US$3.98 1/2 with first support seen at US$4.10 and then US$4, a technical analyst said.

 

In trying to break free from a 14-week-old downtrend on the daily bar chart, bulls will be trying to close above the US$4.42 1/2 resistance level, the analyst said. First resistance on nearby corn contracts is seen at US$4.17 1/2 - the overnight high.

 

DTN Meteorlogix forecast showers of up to 3/4 of an inch in the western corn belt Monday, diminishing as they move east. Light, scattered showers are expected in the south and southeastern parts of the region, while dryness should dominate elsewhere for the rest of the week, the private weather forecasting firm said.

 

Despite some rain-related harvest delays, temperatures ranging from 55-81 degrees Fahrenheit should be favorable for harvest, Meteorlogix said.

 

On Friday, the U.S. Department of Agriculture surprised analysts with a larger-than-expected corn-harvest estimate of 12.2 billion bushels. The government increased its yield estimate to 154 bushels per acre, up from its September estimate of 152.3 bushels per acre. Analysts expected the USDA to maintain its September yield estimate.

 

The government also increased its ending stocks projection, to 1.154 billion bushels from 1.018 billion bushels in its September report. Analysts estimated ending stocks would be pegged at 1.138 billion bushels.

 

Speculative funds cut 14,283 contracts from their CBOT corn long positions and added 10,060 to their short positions, putting them net long 16,570 contracts, the Commodity Futures Trading Commission reported Friday.

 

The supplemental commitment of traders report also showed commercial funds cut 34,057 contracts from their short positions and added 9,661 contracts to their long positions, putting them net short 195,358 contracts.

 

Index funds cut 11,339 contracts from their long positions and added 8,716 contracts to their short positions, putting them net long 285,784 contracts, the CFTC said.