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BA Deere
Honored Advisor

Re: Is The Party In The Corn Market Over ?

I think watch Iowa Rep Steve King, if he gets reelected, then probably that will follow for others of his party.  But he`s in Des Moines Register land, right on ground zero if after the "bombs bursting in air" and Steve King is still standing, then China will capitulate ...for a time and maybe give up the ruse of putting development of SA on the fast track as they imply now.  There`s a glimmer of a $2 rally in beans if there isn`t shall we say "impeachment talk" if that happens the Chinese have no incentive to not continue piling on.

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roarintiger1
Honored Advisor

Re: Is The Party In The Corn Market Over ?

The party is just beginning........

 

The party was over back in 2013 .......it's been a slow grind lower since then.

rayfcom
Senior Contributor

Re: Is The Party In The Corn Market Over ?

You know, I would like to believe that the party has just begun - and today's price action (especially after the damage done to the uptrend in prices last Friday) sure supports that thesis - but all the evidence suggests otherwise.

 

Fundamentally there's a huge crop of corn that's coming to market, and much of the demand we would have expected to see later in the year is being front-loaded now based on the fear of what tariffs will do.

 

Technically the charts look terrible. The only days when volume increases from the moving average is when prices decline. Even today, with a nine cent rise in prices, volume is anemic, not even half of it was in a similar move to the downside on Friday. Open Interest indicators since the lows registered in mid-September have been falling even as prices rose. On top of all that, I sense too much optimism for higher prices, which usually is a contrary indicator. When everyone is on one side of the boat it tends to sink. Sustainable price rallies most often arise when everyone is expecting lower prices, usually because they already have sold their stake. Crude oil in early July of 2017 was the paradigm example, everyone you spoke with in that market was worried that the market was going back to the 20's. It has hardly looked back since, mounting a monstrous thirty dollar rally that has lasted more than a year.

 

These are not the conditions you expect to see from a market if a big rally was underway. These are called bearish divergences, and warn that the present price action is not sustainable. Obviously someone is trying to manipulate the corn market, which is no surprise as it happens quite frequently when there's a long time to contract expiration. What is surprising is that the co-ops are not taking advantage of this upswing in prices under bearish divergence conditions by selling into the rally and securing what appear to be unsustainable prices for the benefit of their clients before the market moves sharply lower when whoever is playing with it has had their fun. 

 

I don't know where this foolishness ends, but I do have a pretty good idea that if you sell into this rally you will be very well rewarded over the next few months. I would gladly change my mind if I had some valid fundamental or technical reasons to do so, but right now all the tea leaves are telling me that long remains wrong and that current prices are not sustainable.

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crophugger
Senior Contributor

Re: Is The Party In The Corn Market Over ?

watch out so you don't fall of the boat over there.Smiley Mad

Spoiler
 
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rayfcom
Senior Contributor

Re: Is The Party In The Corn Market Over ?

Laugh now, but if you are not selling into this price bounce, you'll cry later.

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Rick Bee
Frequent Contributor

Re: Is The Party In The Corn Market Over ?

ray

 

If you do not mind, since you are a trader, would you be willing to post your present trading position on corn?

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rayfcom
Senior Contributor

Re: Is The Party In The Corn Market Over ?

Sure, I am slightly short (less than half a million bushels) at just a few cents below the currently traded levels, looking for the December 2018 contract to reach the target of its double top formation down at $3.29. When that occurs I probably will become neutral on the corn market, and will re-evaluate the conditions that affect both the supply/demand dynamic and the technical outlook for the price of corn at that time.

 

Once the double top formation objective is satisfied at $3.29, my hunch is that from both a technical and fundamental perspective the corn market may be "ripe" for a pretty decent bounce in price that slowly will push prices back near the $4 level. The abyssmal technical condition of the market should start to brighten, and the large overhang of a third straight year of strong production should find enough buyers to ease the supply pressures once prices head back to levels that during the last few years have found support.

 

The danger is that since the highs in 2012 at $8.43, as the market retreated the bounces in price have faded at progressively lower and lower price levels, with the last major bounce losing steam at $4.1225 in May of this year. That tells me the market continues to suffer from more supply than demand and that the long term picture remains bearish. Longer term, I think the corn market as well as most commodities will be at great risk to an inevitable recession that will put additional downward pressure on prices as recessions often do. In some ways we have seen this movie before : rising Crude Oil prices accompanied by a Federal Reserve that seeks to slow the economy with higher short term interest rates working together to cause a retreat in economic expansion. So the race will be on to see whether corn can mount a strong counter-trend rally before the overall economy pressures prices lower.

 

I have not taken much of a position in corn because there were better alternatives to deploy capital, namely the Crude Oil market. But corn does present a compelling case for lower prices at this time and at this price level, for several reasons, some of which I have written about here, and was worth deploying capital into that market to ride a rather strong trend to lower prices.

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vrbuck
Advisor

Re: Is The Party In The Corn Market Over ?

Your a darned loon. Keep talking the market down ray. We had the bottom, like I advertised and now we have a multi stage rally in front of us. Go else where to find your Lemmings.
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rayfcom
Senior Contributor

Re: Is The Party In The Corn Market Over ?

Maybe you're right and maybe not. There's a whole lot more evidence that says this is a correction rather than a rally, but that's what makes a market. 

 

I will try not to say I told you so when corn drops thirty or forty cents from where it traded today, when your multi-staged rally turns into a short term a-b-c correction to the larger downtrend. What you advertised is not selling very well as market participation is dropping as the correction runs out of steam. I don't talk markets up or down, I write what they appear to be telling from the data that accompanies price discovery. If you don't like it, don't read it. If you think you know better, hold onto that corn you have growing in the field and see if you like selling it at $3.30 or $3.15 or maybe lower if the stock market sends us an October surprise.  

 

But I'm not gonna lie, I will be smiling as I spend your money.

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crophugger
Senior Contributor

Re: Is The Party In The Corn Market Over ?

between the basis and futures have added .33 to beans already sounds like we may have a PNW bid too

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