March corn futures retreated on Friday as fears of coronavirus rippled through the commodity complex and the broader market (stock indices), creating a risk-off environment. Is the coronavirus alone, enough of a reason for the market to trade seven cents lower? We don’t think so. We think option expiration played a significant role in keeping a lid on prices at 390, something we talked about in last weekend’s update and through the week in our daily grain comments to clients and subscribers.
So, what’s next for corn prices? We are still optimistic that prices can work higher but need to see technical confirmation in the first half of next week’s trade. 390-392 has been the top end of the range, the market tripped stops above here this week but failed to find follow-through (again, option expiration likely played a role here). The bull camp wants to see consecutive closes above this pocket to encourage a bigger short covering rally (funds are short nearly 70,000 contracts). If the bulls fail to achieve this, we don’t think it will spell disaster, we think we will be right back in the range, creating plenty of opportunity for shorter term traders.
We went into Friday’s session with a Neutral bias but were working with clients to get long exposure on Friday afternoon, into the close. This puts our bias at Neutral/Bullish to start next week’s trade, cautiously optimistic.
Previous Session Bias: Neutral
Resistance: 392-394 ¼***, 407 ¾-411 ¾****
Pivot: 383 ½-384 ¼
Support: 375-377 ¾***, 365-365 ¾****
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