October 28, 2009

While corn market bullishness has faded in the past three sessions, no significant change of momentum has occurred, so for now a six-week-old uptrend is still in place on the daily bar chart for December corn futures.

Chicago Board of Trade December corn futures hit a fresh two-week low of US$3.71 a bushel on Tuesday morning. Prices have backed off sharply from Friday's four-month high of US$4.13 1/2.

However, there is important technical support located just below the market, at US$3.68 1/2. This price level is the last "reaction low" in the present uptrend on the daily chart for December corn. A close below this key level would negate the uptrend and begin to suggest a near-term market top is in place.

Technical resistance for December corn futures is located at US$3.88 3/4 and then major psychological resistance is located at $4.00 a bushel.

Importantly, grain traders will continue to very closely monitor the key outside markets such as the US dollar, crude oil and the US stock indexes. Any sustained strength in the dollar would be significantly bearish for the grain futures, as it would also suggest crude oil prices would start to trend lower. But if the crude oil market continues to work sideways to higher and the US dollar continues to trend sideways to lower, then it's likely there is more upward price potential in corn and the rest of the grain futures markets.