Price action: July corn futures closed up 10 1/2 cents at $6.08, near the session high and at a five-week high close.
Fundamental analysis: Short covering and technical buying from the speculators were featured today after the corn market got a bullish surprise with Monday afternoon’s weekly USDA crop progress reports. The agency surprisingly rated 64% of the U.S. corn crop “good” to “excellent,” down five points from the previous week and three points lower than market expectations. Ratings dropped in each of the top five corn production states. The last weekly drop that large in corn condition ratings, for this time of year, occurred in 2001.
Weather in the Corn Belt also leans bullish for prices. There are significantly dry pockets in the region that need rain. World Weather Inc. today reported “a close watch will be made on nearly widespread rain expected Friday through Sunday and follow-up showers in much of the Midwest Monday through Thursday of next week.” If these rain events occur as advertised, enough rain should fall to prevent crop stress of significance during the next two weeks, said the forecaster.
Technical analysis: The corn futures bulls and bears are on a level overall near-term technical playing field. Recent gains suggest a market bottom is in place and prices are in a fledgling uptrend on the daily bar chart. The next upside price objective for the bulls is to close July prices above solid chart resistance at $6.25. The next downside target for the bears is closing prices below chart support at the May low of $5.47. First resistance is seen at this week’s high of $6.14 and then at $6.20. First support is at $6.00 and then at this week’s low of $5.95.
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