Corn … Selloff Continues, Support Well Below Current Levels

Corn futures (symbol: C) are trading aggressively  lower after breaking the long-running uptrend line dating back to Dec05, which originates at the $1.8575/bushel level. Quoting from our 01Jul14 post, 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.” (can be seen here: http://wp.me/p3SbOG-eq)

The following chart reflects corn futures price dating back 10 years.

Corn Chart, 22Jul14

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.  As expected,  corn spent very little time in the  $4.00-5.50/bushel range, resuming the path to lower prices.

The following evidence suggests the trend lower is winding down:

  • volatility has moderated back to 2010 levels
  • the RSI is again projecting a buy signal
  • volume is retracting despite the aggressive price movement lower

With that said, we do not recommend a ‘catch the falling knife’ trade strategy.

A potentially huge buying opportunity is on the horizon for corn, however, we believe it is from lower levels. Substantial support lies between the $3.25 and 2.90 level. Patience!

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, Energy, RBOB Gasoline, Renewables, Uncategorized Tagged with: , , ,

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