Will the WASDE Save Corn from New Lows?

Will the WASDE Save Corn from New Lows?
Will the WASDE Save Corn from New Lows?
Will the WASDE Save Corn from New Lows? Getty Images

Corn futures have been very quiet even during 2017’s harvest season; and over the last month, the futures have been moving in a sideways range from the $346.50 to $355.00 area.

Coming up tomorrow (Friday the 12th) is a WASDE report due out at 12:00 p.m. EST. This report usually causes some volatility in the grain markets, giving a better idea of the final numbers from the 2017 harvest and an early picture of supply and demand going into this spring’s 2018 planting season.

Today we will take a look at the technical view of corn heading into this potentially volatile time.  The chart below covers the past month of price action using two-hour candlesticks.

While we don’t recommend trading the WASDE report itself, we will note that usually corn has a milder response than other affected markets such as soybeans, and therefore, it could be a more conservative play.

The $350.00 price, marked in yellow, has been a big round pivot for months.  We are using this price as a market bias, wanting to be long above and short below. Just above that, at $350.75, is the 50% retracement of this year’s early range, which also gives credence to our pivot area of $350.00.

Above $350.00 our view is plain and simple.  We would look for a higher move up to this year’s early high at $354.75. This market has seen a lot of resistance above $355.00 over the past several months.  Unless the WASDE suggests a fundamental change, which is unlikely, then we would look to establish bearish positions at that level.

To the downside, if price breaks the orange trend line just below $349.00, we would look to be short this market, watching for a revisit of the red area from $346.50 to $346.75.

Aggressive buyers may want to go long here, but we don’t expect this area to hold as support.  We will be watching to see if corn will reach $325.00 this spring, which is the next big round number, as well as the 23.6% Fibonacci extension from last year’s range. That $325.00 spot is the next area in which we see strong support.


 

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