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Corn targets summer lows; soybeans hold bottom

11/04/2013 @ 7:58am

December CBOT corn futures closed slightly lower on Friday and sharply lower for the week. Corn prices came under pressure Friday after a private forecaster raised production and yield estimates for the corn crop. Informa Economics Inc. pegged corn production this year at 14.223 billion bushels on yields of 161.2 bushels an acre, up from 14.01 billion bushels on 158.8 bushels an acre forecast last month in a report on Friday, traders said.

The bears remain in charge of December corn and the trend across all time frames is bearish. Last week's action saw December corn fall to its lowest level since late August 2010. The bears are targeting continuing losses near term, with a minor objective at $4.17, a spike low from the weekly December corn chart hit on Aug. 13, 2010. However, that is a minor technical point and December corn is vulnerable more substantial slippage in the days and weeks ahead.

On the downside, a major multiweek bearish objective is seen at the $4.00/3.98 1/4 zone, with the latter level representing the July 2, 2010, low seen on the December corn weekly chart.

Technically, the moving average outlook for December corn remains solidly bearish as the contract is under all significant short and long term averages. Momentum is pointing lower, but nearing oversold levels. Also, December corn is hugging lower daily Bollinger band line support.

A modest period of sideways consolidation could be seen very short-term.

Short-term resistance lies at $4.36 1/4 and then at the 20-day moving average at $4.38 1/4.

  • $6.65 -- the contract high
  • $4.35 1/4 -- the 10-day moving average
  • $4.398 1/4   - the 20-day moving average
  • $4.46    -- the 40-day moving average
  • $3.98 1/4 -- the contract low

November CBOT soybeans fell sharply Friday, as the contract approached the bottom of the range that has confined market action over the last month. Soybeans came under pressure following a revised crop estimate from private forecaster Informa Economics, which bumped up its forecast of this year's soybean crop.

Soybean output was estimated at 3.298 billion bushels on yields of 43.3 bushels an acre, up from 3.176 billion bushels and 41.7 bushels an acre projected in October, Informa said, according to traders. The USDA will release its first supply-and-demand report on Nov. 8 since September due to the partial government shutdown last month.

Technically, Nov soybeans have fallen back to range-bottom support at the $12.63/12.61 zone. That floor has held up selling pressure over the last month and is a significant support area to monitor. If that area were to give way this week, it would open the door to a strong fresh selling wave. The downtrend pattern from the late August high gives the bears the edge near term. Also, the market is trading under all significant moving averages, which is also a weak sign for the market. If a strong and decisive breakout under $12.61 is seen this week, it would confirm a bearish downside breakout.

A 61.8% Fibonacci retracement of the August rally comes in around $12.56. But, the bears are eyeing a potential 100% retracement of the late summer rally move in the days and weeks ahead.

Near term resistance lies at $13.00.

  • $14.09 3/4 -- the contract high
  • $12.90 3/4   -- the 10-day moving average
  • $12.86 3 /4   -- the 20-day moving average
  • $13.06 1/2 -- the 40-day moving average
  • $ 9.22 1/2 -- the contract low

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