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Technically, corn to go higher

05/06/2013 @ 7:20am

JULY CBOT CORN, combined pit and electronic trading

Chicago Board of Trade corn futures closed mixed Friday, with nearby May ending with modest gains, supported by tight supplies, while July and deferred contracts saw losses. Tight supplies helped give July futures an intraday boost to higher levels, but preweekend profit-taking and position squaring tugged the market back to slightly weaker levels. Overall, trade was fairly quiet and within narrow ranges on Friday.

Traders remain focused on weather forecasts for corn-growing states. Continued wet weather is forecast in some areas, which could keep farmers out of the fields and further delay U.S. corn planting that is already behind schedule this year. Late planting is associated with reduced overall yield production. Also, some farmers may decide to switch over to soybeans, which have a later growing season.

On the charts, July corn saw a volatile and wide-swinging action last week. However, for the week, July futures did post strong gains on the weekly July corn chart. The market edged higher into the major bearish gap from March 28-April 1, though it didn't fill it.

The weekly continuation chart shows a slightly more bullish picture, as the nearby May contract is still driving that action. On that chart, the corn contract did close the March 29 gap, which is a bullish signal.

Look for the bulls to attempt to close the July corn gap this week. The bulls see initial resistance at $6.69 and then a major target and objective at the gap top at $6.76.

On the downside, strong support lies at the May 1 daily low on the July chart, which comes in at $6.39 1/2. If the bears were to drive prices under that level, it would reveal the bears were back in charge and the gap would likely remain unfilled for now.

$8.24     -- the contract high 
   $6.38     -- the 10-day moving average

$6.35 1/4 -- the 20-day moving average

$6.59 1/4 -- the 40-day moving average

$4.11 1/4 -- the contract low

JULY CBOT WHEAT, combined pit and electronic trading

July CBOT wheat futures ended with losses on Friday, but posted gains for the week, seen on the weekly July chart. Wheat futures fell on Friday amid easing concerns about frost damage to the crop. Less mature wheat isn't as vulnerable to freeze damage, and poor spring growing conditions may have hindered overall crop development.

Private analytical firm Informa Economics estimated U.S. winter wheat production for 2013 at 1.529 billion bushels, down from the firm's April 3 forecast of 1.631 billion, trade sources said Friday. Soft red winter wheat production is forecast to total 508 million bushels, 88 million above last year. The soft red wheat yield is projected to average 60.0 bushels per acre, 0.3 bushel below last year.

On the charts, after a rally in the early part of last week, the market mostly consolidated in choppy, back-and-forth trade. Very short-term, July wheat continues to hover just below important intermediate-term technical resistance at the $7.40 1/2 level, the March 28 daily high.

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