Corn … A Reprieve from Lower Prices

Corn futures (symbol: C) are oversold as evidenced by:

  • stochastic indicators are well oversold and suggesting price reversal
  • the rsi initiated repeated buy signals during Nov13
  • fairly strong volume on increasing prices since mid Jan14, and
  • volatility is nearing support levels from Jun10.

The following chart reflects corn futures price dating back 20 years.

Corn Chart, 16Feb14

The move down from $8.4375/bushel on 10Aug12 has been aggressive and unrelenting. Perhaps most notable on the chart is the Jul13 gap down from $6.84 to $5.4975.  Murphy & Co. expects corn to spend very little time in the  $4.00-5.50/bushel range and eventually resume the path to lower prices for the following reasons:

  • the $4.00-5.50/bushel  price range has historically proven to be a ‘transitional area’ for corn
  • corn technically violated the long running up trend line which originates from the Dec05 low, and
  • while volatility may find some support at this level, we expect volatility should retrace back to the levels seen in 2000-06.

A potentially huge buying opportunity is on the horizon for corn, however, we believe it is from lower levels. Substantial support lies at the $2.90 level.

Murphy & Co’s Corn model is currently short.  To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.

Posted in Ag/Softs, Corn, Uncategorized Tagged with: , , ,

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