Corn futures recovered a bit yesterday despite the steep selloff in the S&P futures. However, the corn futures are still below our near-term downtrend line and all three uptrend lines. Therefore, we maintain our negative stance on corn. If corn should fall beneath February lows, then we anticipate a large selloff with a possible retest of December lows.

Corn futures are following the path of U. S. equities. With Prelim GDP coming in well below expectations, investors are anticipating the demand side of the equation to diminish further. As the U. S. economy grinds to a halt, food consumption should decline.

Additionally, lower demand for meat in effect reduces the demand for corn used in livestock feed. Furthermore, with U. S. citizens driving less and crude prices at a bargain, the demand for ethanol based fuel is waning. Hence, if the S&P futures should continue their selloff as we anticipate, corn futures should flex their positive correlation and follow suit.

Fundamentally, see resistance at $3.4525/bshl, with 2nd tier and top-end resistances hanging at $3.51/bshl and $3.56/bshl, respectively.

To the downside, we find support $3.415/bshl with additional supports resting at $3.365/bshl, $3.3325/bshl, and $3.2825/bshl. The $3.50/bshl area becomes a psychological barrier again with a psychological cushion at $3/bshl. Corn futures are currently trading at $3.4525/bshl.

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