With today’s US economic data coming out below estimates (NY Fed manufacturing index dropping to -10.41, lowest since July 2009), and no major news releases directing the grains markets, we see broad profit-taking across many commodity sectors, including grains and precious metals. However, one commodity stands out as the bull of the day – Coffee futures. Coffee futures have experienced significant short-covering since putting in a low just beneath 160 at the beginning of this month, and since then traders have short-covered this market for six straight days, today being the seventh straight positive day (as of this writing). Commercial hedgers also have been adding to long positions as coffee has finding a base starting in August.
With that said, we’d like to focus on the corn futures market. Corn (and the grains) was easily the bull story of the year as droughts devastated crop productions and forecasts, and investors were buying up many grains products because of this supply crunch, coupled with unceasing global demand for these basic food products. Since putting in a high of approximately $8.40, DEC 12 corn futures have been consolidating, actually putting in a range with lower lows. Corn is close to its recent low of $7.60, and our next major chart support comes in at right above $7.40. We see this is a very big level, as it was a high point in early July of this year, and then turned into support later that month. We see a pivot area for this market coming in at $7.80. If and when corn futures hold above $7.80 again, we look for the market to turn more bullish once again. But for now, it looks as though corn futures are consolidating, having made their big run thus far, and now might go back-and-forth for the time being.