Corn Tech Update
Grain Market Commentary
Wednesday, September 5, 2018
by Jacob Christy, Freedom Program Trader
After a couple of days of short covering, the corn market was back on the defensive today. Declines in both wheat and beans weighed while excessive Midwest rainfall, and growing U.S. demand helped keep losses limited. Feels like the market wants to see the USDA’s September yield estimate before making a move, but with the market technically coiled and funds neutral, that move could be big.
Dec18 corn futures found support just above contract lows late last week. Month end short covering and bargain buying have pulled the market off the lows this week. Overnight the two-day rally stalled at the contracts 50-day moving average, leading to some profit taking by the close. Session volume was much lower today than the two-week average, indicating an unwillingness for new positions.
The market did score a close above 366 yesterday shifting market sentiment more neutral. Stochastics are also in positive position coming off buy signals in overbought territory, both indications of momentum shifts. If the market can manage a move above the 50-day moving average expect a test of the long standing descending trend line. Strong resistance comes in at the contracts 100- and 200-day moving averages from 388-390 which coincide with last month’s high.
The corn market is stuck trying to trade its own fundamentals while being weighed down by other markets. The rejection of contract lows and muted volume today shows sentiment is at least shifting more neutral. Next week’s USDA report probably tips the scales, either pushing corn back down to contract lows, or up to last month’s high. Expect choppy trade until then.