The grain markets continued their trend higher this week following last Friday’s USDA Report. The corn market had the most bullish information to digest in Friday’s report.
Corn valued traded nearly $.30 higher last Friday, yet had an unimpressive close. This week however, renewed buying interest has appeared as March corn rallied nearly $.30 higher before getting stalled out at the $7.35 level. This level matches the mid-December high, and really only poses mild technical resistance. The next target for March corn appears to be the 100-day moving average near $7.42.
The corn market did stall out on Thursday of this week following eight straight trading sessions with higher closes leading up to a three-day weekend. However, the job of rationing old-crop corn supplies is far from over. We would look for March corn to test and violate resistance at the 100-day moving average as trade resumes next week.
The next level in which those in the trade seem to have their focus is the $7.60 level, which would be the 50% retracement level. In addition, as the market approaches $7.60, it will have technicians discussing the possibility of a monthly reversal and even further technical strength.
We would look for the $7.60 level to be tested over the next several weeks. This would provide producers an opportunity to price old-crop inventories as well as advancing new-crop sales. At some point over the next two months, the trade’s focus will shift from tight existing supplies to an outlook for new-crop supplies that will be projected to be burdensome. It is important that producers take advantage of this expected near-term strength before that shift occurs.
(Click on images below to see larger charts.)