July 14, 2016

IFC Markets, Technical Analysis #C-CORN : 2016-07-14

USDA cuts world corn production and stocks outlook in US.

This article is originally referred from IFC Markets Technical Analysis.

In its monthly WASDE report for July USDA cut outlook for US corn stocks of previous crop at the end of 2015/16 to 1.701 billion bushels. This is 7 million bushels less than in June report.

The official estimate was below the range of 1.708-1.907 given by independent analytical agricultural agencies. The forecast of corn stocks of new crop also fell short of expectations. Will the corn prices advance?

USDA believes the world corn production in 2015/16 agricultural season is to be 959.79 million tonnes which is below the 2014/15 reading of 1013.56 million tonnes.

This may lead to 15.7% decline in its global export. The main reason of lower production is drought in Brazil. USDA expects the Brazilian corn crops to fall 21.4% this season compared to 2014/15 season.

The US meteorologists now forecast the drought in US in second half of July and in first half of August.

This may have a negative effect on corn crops in US. US is second to none in global corn production followed by China and Brazil. The main corn importers are Japan, Mexico and South Korea.

Technical Analysis #C-CORN ifc markets

On the daily chart Corn: D1 is correcting up from its 20-month low since October 2014. The Parabolic indicator gives signal to buy which may be used as support level. The MACD has not reversed and continues giving bearish signals.

The Bollinger bands have widened a lot which means extremely high volatility. The RSI has left the oversold zone and is below 50, no divergence. The bullish momentum may develop in case corn price surpasses the Wednesday high of 369. This level may serve the point of entry. The initial stop-loss may be placed below the Parabolic signal, the last fractal low and 20-month low at 339.

Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the break-even point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade.

If the price meets the stop-loss level at 339 without reaching the order at 369, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Buy
Buy stop above 369
Stop loss below 339

This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

Original Source: IFC Markets Technical Analysis

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