A corn market correction up ahead, analyst warns
The turn to the downside in March corn futures from the top of the uptrend channel suggests that a short-term peak is in place, and the market may need some back and fill type action to correct its overbought condition.
A South Korea feed company bought 69,000 tonnes of corn at their tender, and another feeding firm from South Korea bought 193,000 tonnes. Demand factors still look favorable, but the market backed away from a very strong early rally yesterday.
March Corn closed lower on Tuesday and nearly 11¢ down from the highs, as sellers were active late in the day. July corn futures closed 3¢ higher, and the March/July bull spread pulled back dramatically from Monday's contract high. The market is technically overbought, and the short-term swing target at $6.30 per bushel for March corn futures has been achieved. The turn lower after hitting this swing objective could be evidence of a short-term peak.
Demand numbers have been very strong recently, and traders suspect that US corn exports will remain active over the near term. For the weekly U.S. ethanol production report, traders are looking production to come in near 1.043 million barrels per day (1.005-1.072 range) versus 1.053 million per day last week. Stocks are expected to come in near 23.955 million barrels (23.817-24.135 range) versus 23.592 million last week.
The corn market acts like a short-term peak may be in place. Look for resistance in March corn futures at $6.30 per bushel, with support at $6.13 and $6.08. December corn futures have posted new contract highs in four of the last five trading sessions. Look for at $5.64 per bushel, with $5.74 and $5.99 as resistance.
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