Key Levels in the "Corn Correction"
(Relevant Tickers: CORN, DBC, GLD, YCL, SPY)
In the first day of US equities trading since the NYSE historic closing, the ES (e-mini SP) started out with a minor bang but then have recently faltered down close to the unchanged level. Natural gas is seeing a good rebound from yesterday’s big sell-off. The fundamental demand increase story for natural gas has not changed one bit, thus buyers seem to be coming into the market at these levels.
All precious metals are also having fairly exciting days to the upside, with silver and palladium futures leading the way. Silver futures are up 1.26% and palladium futures are up 1.64% as of this writing. Gold is also holding above our recently mentioned key support level of $1700. Japanese yen futures are returning to their bearish ways after a big spike up coinciding with the BOJ announcement recently. 1.26 looks to be solid resistance for the Yen.
We focus on corn futures today. After a monster rally earlier this year, corn futures have seen a multi-month correction move. After almost touching $8.50, corn futures (DEC 12) are stuck in a range between $7.30 and $7.70. We see the $7.70 level as a major resistance point and upper barrier of the range. Corn has also tested the $7.30 level multiple times, and if it gets there again, we could see sellers take it lower. However, as we have noted on the chart, due to the fundamental demand picture, we don’t believe corn will stay below $7.10 for long. We actually look for corn to test the $7.70 level again shortly, especially if a risk-on environment ensues after the election.
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