Corn Tech Update
Grain Market Commentary
Wednesday, September 13, 2017
by Jacob Christy, Freedom Program Trader
Shocks in the USDA crop report yesterday have caused an interesting couple of sessions for the corn market midweek. After the initial market reaction took prices to within pennies of contract lows, the market has seen a follow up flurry of short covering. The buying was limited to half the session today with prices unable to hold upward momentum, backing off the highs before noon. Cz17 futures are now back to pre-report levels, with major technical areas coiling the market into a tight 10c range.
The combination of the 20-day moving average and major descending trend line have capped rallies all month. Today’s rally was the sixth in a row were prices have been unable to breach the 20-day. This makes the technical combination a key upside swing area, as fund covering could be accelerated if the 20-day is breached. To the downside, prices sit precariously above contract lows at 344, with the post-report sell off being unable to forge a new low.
With the steep descending slope of the trend line capping rallies and the horizontal bounces off contract lows, the effect is the market being coiled. When a coil occurs one side inevitably breaks. In the case of Dec futures this coil will fail by month end. Price objective will sit 15c away from either the contract low or trend line position. This makes the next 15 days critical in determining the short term technical momentum of the market. Stay tuned.