The December corn contract bottomed out at $4.99/bushel on May 11, 2012. At this point in time, the trade knew that corn acreage in the US would be enormous while weather conditions were looking near ideal for planting.
Enter "Drought 2012." The market rallied from these lows, trading as high as $8.49/bushel on Aug. 10. The perceived shortfall in production that the drought would cause was enough to push the market to new all-time highs.
Now, the market sits at a crossroads. As fund traders liquidate and seasonal weakness sets in, the market is now $1 removed from the recent highs. How low can it go, and what are some likely downside targets? Using a simple Fibonacci Retracement and some major moving averages, we have identified a few areas of possible support.
1) $7.16 (38% retracement of rally)
2) $6.74 (50% retracement of rally)
3) $6.72 (100 day moving average)
4) $6.32 (62% retracement of rally)
5) $6.16 (200 day moving average)