Corn at Critical Juncture as August Opens

Corn at Critical Juncture as August Opens

Corn at Critical Juncture as August Opens
Corn at Critical Juncture as August Opens Getty Images

The December contract for corn futures represents this year’s harvest delivery. Last August, the 2017 December contract hit a low of 358.50, or $3.58 ½ per bushel of corn.  Since then, the price of corn traveled higher into this year’s planting season; and on July 11th, some bullish (or less bearish) supply and demand figures helped push this contract to new 2017 highs at $417.25.

Since that high in July, corn has seemed to lose favor, once again dropping below the $400.00 level, or $4.00 per bushel, while losing more than a third of the gains from the last 52 weeks.  It appears that corn is at a critical moment moving into the latter parts of the summer growing season.

The light blue shaded region across the chart below highlights the $375 to $385 area that has been a magnet for price over the past year, and that has provided support or resistance at various times. Currently, the ZCZ17 is trading near $380, which is the mid-point of this shaded area. Also noted on the chart is the 50% marker of the 52-week range, which comes in at $387.75.

Corn at Critical Juncture as August Opens

The hypothesis is that if corn holds the $375 support at the bottom of the highlighted area, it should travel back up to the 50% marker at around $387.75. We anticipate some resistance there at first touch. If price is able to convert the $387.75 level into support, then we would look for a push back to the big round $400 price.

If price should fail the $375 support zone, then we would look for a push down to the contract low of $358.50 going into harvest time this year.

Traders should be aware that this is a very volatile time of year in the grain markets and should keep abreast of potential market-altering reports, including a WASDE/Crop Production on August 10th.

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