Corn futures update talking points

Corn price overview

Corn inventories at record highs
Demand for corn a concern
Commitment of traders report
Technical- RSI
01
Will corn prices keep declining or is now a great time to buy
Corn prices are trading at 5 year lows but is this enough to signify a buy position. I think that over
the long term corn will trade much higher than its current price but I wouldnt necessarily jump into the market just
yet. This market as you can see from the chart above is in a down trend. It is never a good idea to buy a commodity or
any financial asset when the price is in a down trend as the forces pushing the price could continue until some event
triggers a reversal causing a change in the underlying trend. We will also take into consideration the factors which
have caused corn prices to decline and whether these issues will persist causing further downward pressures on
futures prices.
Corn price 2010
$3.37-5.52
Corn price 2011
$6.47-6.57
Corn price 2012
$6.57-$7.45
Corn price 2013
$7.45-4.28
Corn price 2014
$4.28-3.24
* Rough yearly price comparison
02
Corn Inventories Climb To Record Highs
The USDA estimates that corn output will increase 3.4 percent this year to 14.395 billion bushels from 2013
which has contributed to the current drop in corn prices. Yield per harvested acre estimate came in at 171.7
bushels per acre which if realized will set a record national average yield.
03
Demand for corn remains a concern
At the same time there is growing concern over demand for US corn. Corn prices in the States, although
historically cheap are still priced higher than other countries. Will demand meet their projections or will it fall
short and cause corn prices to tumble even lower. Corn use is expected to increase as reported by the World
Agricultural Supply and Demand estimates. Corn use as you can see from the above graph are all estimated to
increase slightly from the previous report but does not fully offset the increase in production.
04
05
Technical analysis using the SMA & RSI.
The above graph shows the 14 day RSI and 10 day simple moving average. The RSI is showing signs of being
oversold as it is below 30 at 23.30. The RSI has historically gone to lower levels but this is a confirming indicator
that the market is being sold off. In my opinion the market will continue to fall over the short term near the
$3.20 support level with longer term upside to the $3.80 area. If the bulls win the battle at that price, we could
be in store for a sharp run to more distant resistance levels at $4.62.
www.chrisparr.ca @chrisjamesparr chris@chrisparr.ca
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