MARKET UPDATE

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Today's Main Takeaways

Corn

Overall the outlook for corn still remains bullish from a technical and fundamental perspective.

For starters, look at the spreads.

This is the March to Dec spread. It was -31 back in July. It is now +13.

An inverse market basically means demand is currently outpacing supply.

The Funds

Looking at the funds, they are long around 160k contracts.

Some say it is actually now closer to 200k contracts.

In other bear market years (2014-2019) the funds long position often peaked around 200k contracts.

Just something we need to be aware of is that they are decently long compared to other bear market years.

Some years like 2015 they went almost 300k long, where as in years like 2017 the longest they got was just 100k.

Eventually corn will likely reach overbought status on the charts.

Unless we see more fundamental changes, we could see the funds start to take some profit on their new long position.

Corn is above the 200-day MA

If you remember, I talked about for a few months how the 200-day MA had acted as resistance for corn futures since 2022.

We are now above the 200-day MA.

What does this mean?

For starters it means that this could potentially be our new base of support. It was previously incredible resistance, a case of old resistance turned to new support.

When a market is above the 200-day it also signals that the long term trend is shifting from bearish to bullish.

Bottom line, my next target is $4.67-$4.68

Reason #1 (Chart 1)
It is the 161.8% golden fib extension fo the $4.25-$4.51 rally.

Reason #2 (Chart 2)
Is is the 61.8% retracement to our May highs.

We are already above the 50% May retracement, next logical target is the 61.8%.

Something to be aware of is the stochastics. They are getting toppy which could suggest a short term correction soon.

If we get a correction, I am looking for a bounce in that green box.

Ideally, we hold the 200-day MA.

I could see us just getting a simple re-test of this assending triangle before going higher. Back testing the point of where we broke out ($4.50)

If you have yet to take risk off, not the worst idea to do so here. If you took advantage of our $4.51 signal, the next target is $4.67

(If you missed Dec 11th's signal: Click Here)

Soybeans

Still very little reasons to get wildly bullish on soybeans.

(Unless we get a weather scare in Argentina, but that will likely be a short-lived rally if it happens. Not something that carries on for a month or longer like we have seen in the demand rally for corn).

But the funds are still short, and we have a technical breakout on the charts which could cause a little more short covering.

If we look here………….

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