September 17, 2008
December corn Bears work on resuming downtrend
December Chicago Board of Trade corn futures price action Tuesday (September 16) morning is showing strong selling pressure to suggest the recent price strength was just a short-covering bounce in a market that wants to continue to trend lower.
Importantly, the key "outside markets" - crude oil and the value of the US dollar against the other major currencies - are exerting a major influence over the grain futures market at present, especially crude oil prices.
The fact that crude prices have dropped well below what was major psychological support at US$100.00 a barrel is now sucking speculative money out of most commodity markets, including the grains.
It's likely that grain traders will continue to focus more on the outside markets in the near term and less on grain market fundamentals. And it's likely the outside markets will continue in a bearish posture for corn and the other grain markets for the near term.
Technical resistance for December corn is located at Tuesday's high of US$5.65 a bushel, at US$5.75 and then at US$5.80 3/4, which is the top of a downside price gap created on the daily bar chart on Sept. 2. A push above US$5.80 3/4 would provide the bulls with fresh upside near-term technical momentum to suggest that prices can trend sideways to higher in the near term.
Technical support for December corn is seen at Tuesday's low of US$5.43 3/4 and then at last week's low of US$5.31. The next downside technical objective for the corn bears is producing a close below last week's low, which would then suggest a challenge of the August low of US$5.04 1/2 and even major psychological support at US$5.00 a bushel in December futures.