Corn Tech Update
Grain Market Commentary
Wednesday, July 12, 2017
by Jacob Christy, Freedom Program Trader
Corn futures spent much of session on the defensive today as prices tumbled from yearly highs. The USDA released larger than expected U.S. ending stocks for both the 16/17 and 17/18 crop years causing funds to sell. Additional pressure came as the western corn belt saw much needed moisture, that was not originally forecasted. Prices sank 15 cents on the day with Dec17 futures closing back below the 400 mark. Now, with the crop entering key developmental stages, the market finds itself at a tipping point.
Dec17 futures hit their highest levels in 13 months yesterday, fueled by poor crop ratings Monday after the close. Once there, prices struggled to breach the technical combination of the short term ascending trend channel top and major descending trend line drawn off the last two summer rally highs. The market had also reached deeply overbought territory an indication the rally was running out of new buying interest. Then today, the combination of improving weather and higher than anticipated ending stocks were too much and the overbought market corrected.
It will be interesting to see if the market sticks around 400 or if further declines are ahead. Look for the combination of the major moving averages clustered from 388-393 to be a key indication of market direction. Hold above them, and the market may only be taking a breather, break below them, and a test of recent lows may be on the horizon.
Overall a disappointing day for the corn market. The market had a nice run from lows on June 30th. With fund now long and the market in overbought territory a correction seemed likely. Weather will determine if today was a short term correction or the start of a large term reversal. Stay tuned.