November 24, 2008

 

CBOT Corn Outlook on Monday: Up 7-9 cents on overnight gains, outside markets

 

 

Chicago Board of Trade corn futures are expected to open 7 to 9 cents higher Monday on outside market support stemming from the government's plan to bail out Citigroup Inc., and on follow-through buying from overnight gains.

 

In overnight trading, December corn was up 9 1/4 cents to US$3.47 3/4 and March corn was up 9 1/2 cents to US$3.63 3/4.

 

News of the U.S. government's bailout of Citigroup will set the tone Monday, traders said, as it is expected to boost U.S. stocks. Overnight gains were due in part to Friday's sharp climb in equities after the corn market closed, traders added.

A weaker dollar and higher crude oil will add to the support Monday, traders said.

 

Corn has little supportive news of its own, traders said. Export demand remains very weak, and ethanol demand is also expected to suffer due to the woes of VeraSun Energy Corp.

 

A trader said the market will see light trade all week because of the Thanksgiving holiday on Thursday. That could lead to consolidation by traders, although thin trade could also make for wild price swings, an analyst added.

 

The next downside price objective is to push and close March prices below solid technical support at US$3.50, a technical analyst said. The next upside price objective is to push and close prices above technical resistance at Friday's high of US$3.78 3/4.

 

Cold and dry conditions in the U.S. corn belt are expected to aid in the finishing of harvest, analysts said. DTN Meteorlogix calls for "mainly favorable conditions for the harvest of corn through the western Midwest region during this week," although precipitation in the east and south on Monday may slow the harvest.

 

Country Hedging said in a morning commentary that "funds continue to add to their short position with U.S. prices still uncompetitive in the world market."

 

Speculative funds cut 4,315 contracts from their CBOT corn long positions and cut 3,633 contracts from their short positions, putting them net short 45,067 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed that commercial funds cut 18,230 contracts from their long positions and cut 10,381 from their short positions, putting them net short 126,402 contracts. Index funds cut 5,196 contracts from their long positions and cut 3,173 contracts from their short positions, putting them net long 223,985 contracts.