Corn Tech Update

The wild ride continues as wet weather will push plenty of states to the verge of their prevent plant dates. Funds have been actively covering shorts, while farmers have been catching up on old crop sales, as volume has exploded. With the size of open interest, volatile price action is sure to persist until trade gets a firm grasp on the magnitude of damage being done to new crop supplies.

Looking at the charts shows the explosive three day rally we’ve seen so far this week. The key reversal Monday was followed up by a gap higher Tuesday night, with follow through yesterday. Late pressure brought things to unchanged but buying has resumed overnight. Farmer selling at both the 50- and 100-day moving averages was clear yesterday, but the size of fund short covering is easily overwhelming the market.

To the upside if prices clear the 200-day moving average, which hasn’t been done since June of last year, expect an acceleration in buying. While the old adage of gaps always get filled points to an eventual test of the 357-360 area.

A full-on weather scare has prices much more active this week. Techncials matter very little when funds run for the door. With that said keep an eye on both the 200-day moving average and the open chart gap as key short-term chart-based targets.