Grains Bloodbath | Can Markets Stabilize?

Corn (December)

Fundamentals: Corn futures were locked limit pretty much all day, was there that big of a change over the weekend? We think not, but we also think the market may have gotten ahead of itself following last week’s USDA report. It is very evident that money flow (largely from computers/algos) is dominating the market and adding to the large daily swings. Yesterday’s crop progress report showed good/excellent conditions at 64%, in line with expectations and unchanged from last week. This is 7% below last year’s rating.

Technicals: With the limited trade yesterday, there is not a lot of new information we can add today. In yesterday’s report we talked about a break below the 560-area opening the door for a retracement back into “the mid 520’s”. This represents trendline support and the 100-day moving average. We like being buyers on the first test, but do not confuse that with an overly bullish stance. There have been and will likely continue to be great trading opportunities for participants on both sides.