Hot and dry is the story right now. This is why we have seen a little bounce overnight in the corn market. The weather, coupled with losses from the state of Iowa, gives the bulls a slight advantage today and early this week. Fund traders still hold a position of net short 110,000 contracts, which could spark a decent rally if resistance gives way and there is a bigger turn in the fundamentals. Downward trend channel resistance comes in right around $3.50, which will be a big test for any rallies.
Scares of some harsh dryness has the market bouncing overnight, but rallies should be limited until we see how much relief the crop gets from tropical storm rains this week. Crop conditions being at historically high levels for this time of year also has people guessing whether the potential damage from dryness will hurt as much as it would in a normal year. The advanced progress may help keep the crop from getting too damaged to affect prices enough. The RSI is reaching near 65, anything over 70 and the market begins to feel overbought. I wouldn’t be surprised to see soybeans fail at the top end of the channel. A break above the channel should test last week’s high around $9.20.
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