Corn catches a bit of tailwind on a huge backstroke by the U.S. dollar and strength in the wheat market. Unfortunately flat-price is only up about 10¢ on the week and the market still continues to chop around in a sideways channel near the lower end of the range.
On a 5-year technical chart of corn, we remain stuck in a price-range somewhere between $3.20 and $4.40 per bushel. Simple math tells us the mid-point of this range is $3.80, not so surprisingly that seems to be where corn appears to feel the most comfortable. I still believe we have upside potential in early 2016, especially with the funds short nearly 150,000 contracts.
If we can get some additional weather headlines out of South America, particularly larger uncertainty surrounding Brazil's "second-crop" corn acres, I suspect we could test the upper-end of the range. If we could somehow follow those headlines with a major turn-around in crude oil and a trend-reversal in the U.S. dollar, then there's a real good chance we could see a breakout to the upside and $5.00 per bushel is back on the radar screen.
Before you get your hopes up and get overly excited, keep in mind this would be like hitting a trifecta out at Belmont Park, one that also included a couple of long-shot winners. At this juncture the South American weather could be a complete coin toss, but turning around the U.S. dollar and the overall direction of crude oil seems a bit more of a stretch.
As a spec I have to imagine the equation for higher corn prices right now is something like: U.S. Dollar lower + Crude Oil higher + fresh South American weather headlines = Higher Corn Prices. In simple terms, if the trade sees this type of setup or these three stars align, corn prices have a very strong chance of moving higher. If we could string together a few days in a row with this bullish equation in play, then perhaps we could start to really shake a few bears out of their short-positions? The odds of this happening don't appear to be in our favor, but there's certainly a chance. Continue to stay engaged.