The most asked questions yesterday were, “What happened to the corn market? Why is it so strong?”
For one, common sense finally kicked-in. Yesterday morning, corn was trading lower for the 9th out of the last 10 days during which bullish fundamental tidbits continued to develop every day, but were ignored by the market. Eventually, the market must come to terms with dozens of bullish tidbits.
Secondly, corn tested the September 19th low, making a double bottom on the daily price chart, which is a reliable predictor of a price area that will attract a lot of buying. As a client said yesterday, “The overnight trading volume was largest it has been for weeks and the sellers could not push it below that area support. That is bullish, isn’t it?”
Yes, it is bullish, and when the sellers gave-up trying to push the price through that area of support, they had a lot of contracts to buy to offset their heavy selling not only on Friday, but for the past ten days. And that heavy buying resulted in December corn trading as much as 13¼¢ above the overnight low of $4.68.
Friday morning, we included this paragraph in our early morning report:
"What is going to happen with December corn? Here in the short run, it will test the contract low of $4.67¾ made on September 19th as the funds try to push the price down into the sell stops under that contract low. They very well may be successful. If so, the funds will become big buyers. They will buy the contracts they sold the past two weeks and they will buy again to get net long December corn."