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Corn seen retesting August lows

09/23/2013 @ 8:09am

December CBOT corn tumbled to a lower close Friday, as losses were seen around the Chicago grain pits. Soybeans registered a big decline and wheat settled down as well. December corn reversed two days of minor gains to push to its lowest level since August 14. Soybeans plunged amid concerns recent heavy rains could help boost overall yields, following a long period of hot, dry weather. Corn remains under pressure as the harvest has already begun for this year and a record U.S. corn crop is forecast.

On the daily chart, the near-term trend and the long-term trend remain solidly bearish for December corn. The contract closed lower on the week, marking the third week in a row of consecutive losses. The bears are targeting a retest of major chart support at the Aug. 13 swing low at $4.45 3/4, which represents the lowest price for December corn since October 2010.

Technically, the trend, momentum and moving average outlook all remain bearish. The $4.45 3/4 floor could act as strong support and could be tough to crack on the first test. But, if it breaks it would unleash a fresh new down leg in market action. If that floor were to give way, a minor downside objective comes in at $4.25 1/4, an old weekly continuation chart spike high from August 2010. But, more significant losses could be targeted under the $4 zone on a multiweek to multimonth basis.

On the upside, resistance lies at $4.73 1/2, the Sept. 11 daily high.

$6.65     -- the contract high 
   $4.60 1/2 -- the 10-day moving average 
   $4.69     -- the 20-day moving average 
   $4.68     -- the 40-day moving average 
   $3.98 1/4 -- the contract low 
DECEMBER CBOT WHEAT, combined pit and electronic trading

December CBOT wheat futures reversed Thursday's gains marking the upside breakout a "bull trap." Wheat came under pressure on Friday amid spillover selling pressure from heavy losses in soybeans. Overall, the December wheat contract fell back into recent ranges. Generally, a failed range breakout will leave the market vulnerable to a retreat back to the range bottom, or in this case the $6.37 1/4-$6.35 1/2 zone. Look for the bears to target a test of that area near term.

Resistance lies at $6.55 and then $6.62 1/2.

The longer term trend is down. The market has shifted into a neutral sideways range since mid August, but all rally attempts have been short-lived and failed. If the December wheat contract breaks $6.35 1/2 a strong new selling wave is possible.

$9.13     -- the contract high 
   $6.46 1/4 -- the 10-day moving average 
   $6.49 1/2 -- the 20-day moving average 
   $6.52 1/4 -- the 40-day moving average 
   $6.35 1/2 -- the contract low 
DECEMBER KC WHEAT, combined pit and electronic trading

December Kansas wheat gave back all of Thursday's gains, plus a little more to close with solid losses on Friday. However, the market closed little changed on the week. The December Kansas wheat contract remains locked in a near-term sideways range. The downside is vulnerable. Look for the bears to test the contract low support at $6.76 3/4 this week.

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