June 19, 2009

Chicago Board of Trade December corn futures recently suffered serious near-term technical damage on the daily bar chart.

A six-week-old uptrend line on the daily chart was this week penetrated on the downside and negated as prices on Wednesday hit a fresh five-week low.

The month of June has seen corn futures prices shed around 50 cents a bushel in value.

December corn finds solid technical support at this week's low of US$4.19 1/4. A close below that price level would produce more chart damage and open the door to a quick challenge of major psychological support at US$4.00/bushel.

Technical resistance for December corn is located at US$4.32 3/4, at US$4.38 and then at US$4.45. Strong technical resistance is located at US$4.50. It will take a close back above the US$4.50 level to provide the corn market bulls with renewed, strong upside near-term technical momentum.

From a longer-term technical perspective, the weekly continuation chart for nearby corn futures shows prices have backed down from the recent highs but a longer-term price uptrend is still in place. A drop in nearby corn below solid longer-term technical support at the US$3.90 level would penetrate on the downside the uptrend line on the weekly chart and produce some longer-term technical damage.

Importantly, upcoming is the critical trading period for the grain futures markets - right after the Fourth of July holiday. That first trading day after the three-day holiday weekend - Monday, July 6 - will be a very important trading day in the grains. History shows that existing price trends in the grain futures can either accelerate or be halted that first trading week in July.