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Senior Contributor

Corn Market Update

Cormn moved higher into my previously defined resistance area on Monday, the continuation of a price rally troubled by the fact that the only time volume and Open Interest rise is when prices retreat. This reduction in participation as prices have risen is a clear sign that end users and funds are not believing in the rally's legitimacy, and that the push higher is led by shorts covering rather than new longs joining in.

 

Combining the lack of new participation, the still strong reports from the USDA in spite of anecdotal reports to the contrary, a return of sunny weather to the corn country, and overbought technical indicators, this resistance zone between 376 and 385 should prove to be an excellent sell zone for the foreseeable future. Again the risk from here is a move up only to just above $4, but the downside potential is over half a dollar. Now that so many weak short positions are out of the market, and end users remain reluctant to step up to the plate, a down move from here will at least initially scare buyers away rather than entice them. 

 

Export Inspections for corn fell sharply (~25%) last week, perhaps indicating that the front-loaded buying that occurred over fear of steepened corn tariffs has run its course. The harvest report that will be released this afternoon after the close of Monday Corn trading will be of great significance to where prices go for the remainder of this week. This will be the market's first look at how much the inclement weather slowed the harvest, and will shed light on how much concomitant damage was done to the crop still in the field. Its going to be the time when the rubber hits the road, as for the most part for the last two weeks the reports in this forum have stated that the weather did more damage to harvest and crop quality than commonly believed.

 

I always am suspicious of government or industry reports being leaked in advance of their official release, which may turn out to be the reason why corn prices are rising today. I'll be back later with an overview of that report if I have time. 

 

Recommendation is the same, sell more strongly now than you did in the $3.60s, you should be close to having 30-40% of your expected fall production placed with the arrival of today's higher prices, holding back the remainder if the market proceeds to move up into the $3.90s to low $4's.

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3 Replies
Honored Advisor

Re: Corn Market Update

Corn up 4 @ the casino 

 

4¢ reduction on basis at e plant

 

8¢ gain total 

 

I sold some 6¢ ago. Was better than 95% of last year's sales.

 

Probably not selling any more till I get it into a bin.

 

 

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Honored Advisor

Re: Corn Market Update

december is poised to set annual highs in corn for the 12th time in  50 yeas.

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Honored Advisor

Re: Corn Market Update

4 cent gain at the casino and the local ethanol plant added 2 cents to the basis.  They are getting plenty of corn here.

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