Corn Tech Update
Grain Market Commentary
Wednesday, March 14, 2018
by Jacob Christy, Freedom Program Trader
The corn market remains near the top of its recent rally, but is showing signs of slowing. Each of the past two sessions have seen prices give up early gains by the close. With the market deeply overbought and uncertainty regarding the stocks and intentions report, prices might enter a more sideways pattern. If prices prove unable to continue the rally on a day-to-day basis, the market might set back leading into month end.
Looking at the chart shows the market is still well within its upper trend channel. A close below 383 versus the May futures contract is needed to break that channel. Yesterday (Tuesday), prices moved to seven month highs but were unable to hold gains into the close, and saw further liquidation on the close today, in clear reversal action. Tuesday’s high now represents a clear upward target. To the downside, further liquidation will find support at the trend channel bottom initially with further support at the combination of the old September high and 200-day moving average from 379-382 again versus the May futures.
Corn prices have been on a nice push higher. Funds have converted a 225K contract short to what is now estimated as a 200K long in just eight weeks. But with the funds now loaded long, and the market deeply overbought, buyers may become harder to come by in the extreme short term. The market dynamic sets up for a corrective move lower over the next two weeks. Keep in mind a correction from overbought territory probably won’t bust the markets recent upward trend. A shift in fundamentals or shock in the month end reports are needed for a correction to become a full out liquidation.