Is $5 Corn just around the corner?

 

 

Rounding bottom, strong momentum indicators and cheapness to Beans all point to higher Corn prices

The advance on February 14 confirmed the completion of a rounding bottom on the continuation daily Corn futures chart. Note that the momentum indicator (MACD) is very strong. Downside reactions in Corn should be minimum and brief. The pattern target is 4.72 with a possible swing target of 5.08.

2.20_Corn

The 5.08 target from the daily chart also represents a test of the 2012 low on the weekly chart. The rally on the weekly chart is relieving the extremely oversold condition in Corn.

2.20_Corn_weekly

Corn remains historically cheap in relationship to Soybeans. The quarterly graph below represents the value of one contract of Soybeans minums two contracts of Corn. As this graph shows, Soybeans are near an all-time high premium to Corn. This fact does not mean Corn prices will advance, but it is a strong indication Corn would have limited downside potential.

2.20_Beans_Corn_quarterly

Traders should consider a long position in the Dec. 2014 contract, as shown below.

2.20_ZC14

There is a chance that the 2014 low has been registered in Corn.

$ZC_F, $ZS_F

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