March corn appears to be setup for a breakout coming soon. Overnight news has caused some confusion as to how this will impact phase one of a trade deal. Managed money is holding a net short position of 85,000+ contracts while open interest remains low. On top of the potential short covering rally, the market may also need to absorb new buying from index funds. The Jan USDA supply/demand update is likely to show lower production and higher demand, with the wild card still being that China may buy more corn. Forecasts for drier weather in Brazilian and Argentine corn growing areas through mid-January.  In addition, corn continues to find support from the prospect of increased Chinese imports this year.

Corn fundamentals are shifting more in the favor of the bull camp.  Today, resistance comes in at 393 and 395 with support coming in around 389 and then 386 below that.