05/19/23 Grains Fail Another Rebound Attempt

The latest grain price slide has been a product of various headline shocks – starting with a bearish USDA report and including another Chinese corn export cancellation as well as the announcement of an extension for the Black Sea export deal; however, the selloff turned into something more than fundamentally motivated as it became technically-driven following the break of the lows from earlier in the month and from last summer. The tumble also turned “mechanical” in the sense that stop loss orders were hit to help snowball the move before more liquidation was forced by traders deciding to close out positions rather than margin them. The technical and mechanical nature of the price action will continue to play a key role in where prices go from here, so we will assess the critical chart points alongside consideration of factors like volume and open interest, trader positioning, and seasonality.   As a starting point for forming technical objectives, corn futures should be viewed on a continuous chart that shows a running history of the nearby contracts. The continuous chart now features an open gap where May corn just expired at a wide premium over the July. This expiration gap leaves open…