Morning Market Update – June 23
Good morning. This Tuesday, June 23, December corn is launching a major attack on an important support level.
If you look back over the last two years, you'll see just how significant this support area is. It's a level that has held the market together, and it's now being tested once again.
The question is: what happens if this market comes apart and breaks below support?
From a technical standpoint, we've already seen a Wave 1 decline of roughly 26 cents, followed by a Wave 2 recovery and a sharp Wave 3 lower. The current rally could be considered a Wave 4, which means a potential Wave 5 decline could be next. If that Wave 5 measures another 26 cents, it would project December corn down to approximately $4.23½, based on the recent high near $4.49½.
That's the downside risk if support fails.
However, if the market can close back above $4.39 today, it would help keep that bearish scenario at bay and allow traders to focus on the June 30 Stocks and Acreage Report.
There are also supportive fundamentals developing overseas. Europe is experiencing extreme heat, with temperatures approaching 100 degrees across Germany, France, and Poland. Corn in those regions is currently pollinating, and dryness has been widespread for the past three weeks. As a result, crop prospects are beginning to decline.
For now, the technical sellers are pressing the market lower. If support can hold, we could see a bounce into the end of the month ahead of the June 30 report. If not, traders may attempt to push the market toward lower targets.
Keep a close eye on today's close. A settlement more than a penny below $4.39 could signal additional downside pressure, while a close above that level may open the door for a recovery rally.
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