Corn Fundamental Support
Trade was likely disappointed to see Friday's Commitment of Traders report showing funds only short 87K contracts when analysts were thinking more along the lines of 150K. Those who had bought corn had likely expected fund short covering would offer a bounce to at least 380 or higher.
After seeing that funds have already short covered over half their positions with March still stuck in the low 370s likely caused selling from lowering of expectations. This doesn't change the long term outlook for corn, only that the recent range could continue to hold with heavy resistance expected in the low 370s.
With no major reports due out, it will be tough to get much past 370 if fund short covering was unable to cause it. On Feb. 9 we will get the Supply/Demand report for the month which is only expected to slightly change demand numbers. Corn should remain well supported going forward but traders should not expect a sudden move higher through the 370s just yet.
- Continued fund short covering should offer solid support on pullbacks
- A slowly improving demand picture will keep plenty of other buyers active on small pullbacks
- Sellers know exactly where to step in again on this market, around 372 in the March
- Bears will be looking again for a slowdown in exports and a faster than expected slow down in ethanol production