November 3, 2008


CBOT Corn Outlook on Monday: Up 1-2 cents; harvest weather pressures



Chicago Board of Trade corn futures are expected to open 1 to 2 cents higher, as good harvest weather pressures the market and outside markets create an uncertain outlook.


In overnight trading, December corn ended up 3/4 cent to US$4.02 1/4 and March corn ended up 1 cent to US$4.20 1/4.


Weakness in the dollar could provide support for the market, analysts said, although Don Roose, president of U.S. Commodities in West Des Moines, Iowa, also noted that crude oil was lower in morning trading, which could pressure the market.


Warm, dry weather across the U.S. corn belt is ideal for the harvest, and is weighing on prices, analysts say. The favorable weather lasted through the weekend and is expected to persist early this week.


"Really, it just continues to be an amazing fall here so far," Roose said. "The fear not being able to get the crop out is dwindling fast."


Analysts expect Monday's U.S. Department of Agriculture crop progress report will the harvest to be 50% to 55% complete, which would be up from 39% the prior week. The crop still remains behind schedule, however, after late planting.


The pressure from the harvest is limited right now, a trader said, since "farmers are not selling right now."


In other news, VeraSun Energy Corp., one of the nation's largest ethanol producers, announced late Friday that is it filing for Chapter 11 bankruptcy protection. A trader and an analyst noted that the bankruptcy has been rumored for weeks, and would likely have little effect on Monday's corn market.


A technical analyst said the market needs to close above gap resistance crossing at US$4.53 to confirm that a seasonal bottom is in place. If December renews this fall's decline, the 87% retracement level of the 2006-2008-rally crossing at US$3.27 is the next downside target.


First resistance is Friday's high crossing at US$4.10 1/2 and then at US$4.20, the technical analyst said. First support is the 10-day moving average crossing at US$3.98 1/2 and then at Friday's low of US$3.95 1/2.


Analysts see little effect from Tuesday's U.S. presidential election, although Roose said it could add some psychological support to the markets, regardless of the outcome.


"I think the feeling we've got is that there's an optimistic view that change is in the wind, whichever party you're for," Roose said.


Speculative funds increased their net short position during the week ended Oct. 28, the Commodity Futures Trading Commission said. The funds added 13,898 contracts to their short positions and 1,347 contracts to their long positions, putting them net short 19,484 contracts.


The supplemental commitment of traders report also showed commercial funds cut 15,153 contracts from their short positions and added 6,400 to their long positions, putting them net short 149,681 contracts. Index funds cut 6,963 contracts from their long positions and added 6,893 contracts to their short positions, putting them net long 245,768 contracts, the CFTC said.

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