More record highs in corn prices are on the horizon, as the technical picture of the CBoT December corn future suggests this month's high at $8.49 a bushel will be tested.

The drought in America is considered to be the worst in half a century, which is significantly affecting the supply of most agricultural products, and therefore sending prices sharply higher.

Front-month soybean futures recorded a new all-time high on Tuesday, and the price of corn, which has had its harvest forecast cut by 27 percent since June by the U.S. Department of Agriculture, only needs to increase by another 1.5% to retest its $8.49 peak set on Aug. 10.

A powerful bull market has been in evidence since the late June push above $5.69, and the pace of the steep bull wave only began to slow down in late July/early August.

The Aug. 10 bearish outside day reversal candle marking December corn's record high at $8.49 did prompt a correction down to $7.86, but this week's strength forced a break above $8.1375 to open the $8.49 peak once more.

For details, see the CBOT December corn future weekly chart.

Last week's doji candle neutralized the threat of a sharp correction lower, suggesting a holding pattern such as a bull pennant, bull flag, rectangle or ascending triangle pattern is developing.

Projected support at $7.00 is likely to cushion corrective bear waves, which would provide a convenient measured upside target of $10.00, should the $8.49 peak be subsequently broken.

A large upside gap between $6.76 and $6.8525 will underpin projected support at $7.00, and only a sustained break below $6.76 would negate thoughts of reaching the psychologically-important $10.00 level.

At 0853 GMT, the CBOT December corn future stood at $8.36 a bushel.

(Francis Bray is Dow Jones's chief technical analyst for Europe, and has worked as a technical analyst and trader for 20 years at Pyne Trading and Informa Global Markets in London, Barcelona and Guernsey. He can be reached at +44 (0)20 7842 9249; or by email: francis.bray@dowjones.com)

For more technical analysis see: Dow Jones Newswires, N/DJTA; Bloomberg, NI DJTA; and Reuters key word search "INSI-DJN"

Data provided by CQG International Ltd.

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