August 12, 2008

US corn hammered lower, but now oversold

Crude oil and other commodity markets have pushed US corn futures lower, but the downturn may have been a bit overdone.

December corn futures at the CBOT on Friday (August 8) closed sharply lower, near the session low, hit a fresh 4 1/2-month low and closed at a bearish weekly low close.

The market has been pounded lower recently, amid bearish outside markets, such as lower crude oil prices and a stronger US dollar versus other major currencies. Grain traders will continue to look to these two key outside markets for direction.

A steep six-week-old downtrend line is in place on the daily bar chart. The next downside price objective for the corn bears is to push and close December futures prices below major psychological support at US$5 a bushel.

The bulls' next upside price objective is to push and close prices above solid technical resistance at US$5.50. First resistance for December corn is seen at US$5.25 and then at US$5.30. First support is seen at the March low of US$5.13 1/4 and then at US$5.