Corn Futures:
Listed below are 2 price charts, top one is old crop and the bottom one is new crop corn. Corn has been finding resistance at former support indicated by the horizontal blue lines on the charts. You will also notice the new crop corn chart did not go down and break the pre March planting report low adding to the argument that last week’s blowout in May was a move to get NEW weak longs out of the market. We did not recommend anyone to exit long positions at that time. This has yet to be proven as the correct thinking but in time I feel like we will be correct.
Corn and beans will be sensitive to each other’s price movements. Especially if the move is higher I believe. Taking a look at the commodity markets as a whole, grains are clearly the cheapest sector, and funds are still massively short of corn and beans. Once people realize they don’t want to be the last one short, in one of the cheapest market sectors, we should see them exit fast, but so far they have been defending their position. It is possible they see something we don’t, but with the way energies, and metals are trading, it appears we have some strong inflationary pressures reamerging.
Old crop corn chart:
A solid close above the 4.40 level will help spur more fund short covering in my opinion, but to really be comfortable a move back above the report day high should negate the inside day breakout lower we had on Tuesday.
Notice the low in the new crop corn chart. You can see a bit of symmetry going on. This is a characteristic of a low, not a garuentee but a nice sign. New Crop is maintaining price above major moving averages, but finding resistance at former support. This week should be the deciding factor for the grain markets.
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