Corn prices climbed last week near the previous local high after the U.S. Department of Agriculture reduced its forecast for 2021/2022 U.S. ending stocks and raised expectations for corn used for ethanol. In fact, the USDA raised its forecast for corn used for ethanol by 50 million bushels to 5.25 billion bushels. There is not much hope of a big rebuild in stock levels for the coming year, especially if ethanol demand keeps rising along with energy price
Technical analysis :
By analyzing the daily corn prices using Ichimoku, we can notice a very interesting pattern. This double bottom pattern “A”, “B” fulfills all the conditions of a "border line", a pattern that was introduced by Goishi Hosoda, the creator of Ichimoku. Indeed, the second bottom “B” was formed in an interval of 26 periods after the formation of the bottom “A”. Moreover, the breakout of the cloud by the prices allowed an accelerating rise. This pattern provides three price projections: “E1”, “E2” and “E3”.
These three levels will not necessarily be reached, but it should be kept in mind that breaking the first level “E1” at $599.40 per bushel should allow the rise to extend to the second level “E2” at $650.49. Finally, the 3rd level at $701.58 will be the last target in case of a breaking of “E2”.
This scenario will be rejected if corn prices fall below the local high between “A” and “B” at $549.40 per bushel. It is worth mentioning that this level corresponds precisely to the support that allowed prices to rebound last week.
CORN, D1 interval, Source : xStation5
Reda Aboutika, XTB France
