8/9/2022

Money was eager to buy the open after the USDA reported the crop conditions lower than what the market expected. December corn gapped higher at the open, putting a second gap between our 6-month low and current price level on the chart. A gap remains overhead at 728'2, trade now has some technical objectives to play with and target in either direction. The USDA lowered the good/excellent rating in corn by 3 points to 58% and the soybeans g/e rating was cut by 1 point to 59%. Much like we saw with the Brazil soybean forecasts and predictions early this year, there's a race developing to see who can come up with the lowest yield prediction for the U.S. corn crop. Using satellite imagery (and some creative math), DTN has come up with a 167.2 bu/ac yield estimate for this year's crop. Not sure why they even reported this number. If this was even in the realm of believable, the market would have likely been locked limit higher immediately. Providing the most upside right now is the funds and managed money have liquidated a large portion of their long positions. If the market conditions are right, they could take back some of that length, lifting the market. At 8 a.m. this morning, the USDA announced the sale of 133,000 tonnes of corn to China for delivery during the 2022/23 marketing year.

Three gaps present on the December 2022 corn chart. A “breakaway” gap at 728’2 and 584’2 and a “continuation” gap at 611’0. Breakaway gaps signal a change in trend and continuation gaps occur in the middle of a trend.