Corn Prices Soar on Escalating Global Supply Concerns
The corn market has broken out of its three-year price range due to various fundamental factors, including a bullish August WASDE update and damage to the European corn crop from extreme drought. The resulting surge in prices was also influenced by reports that Russian President Vladimir Putin plans to escalate the war with Ukraine, which could further disrupt grain shipments from the Black Sea region.
According to market dynamics expert Mitch Miller, the current bull market is different from a typical run-of-the-mill bull market. This commercial-led bull market is driven by end-users' need to cover their requirements despite declining supplies and rising prices, leading to shallow price pullbacks and aggressive spikes.
Looking at technical analysis, the breakout chart shows a measured move target of approximately $6.14/bushel, based on adding the $1.07 range to the breakout level. Additionally, a gap up was left on Sunday evening's open due to the bullish Pro Farmer corn yield estimate, which suggests much higher prices to come.
Miller warns that profit-taking pullbacks may be shallow and short-lived, while spikes in between could be significant. The normal course of action would be for traders to fill the breakaway gap and test support at old resistance levels.