OptionEye....June 6th

[ShelladyOptions]

Good morning.

Corn is unchanged this morning with old vs new coming back about 2 cents from yesterdays blood bath.

Wheat is a little easier with beans down 5 in front and down 2 in the backs.

The ECB has left interest rates unchanged. Challenger job cuts come in better than expected and we await jobless claims to help give us a window into tomorrow's unemployment picture.

So, where do we go from here? Looking at chart of Dec corn really doesn't give me a strong feeling either way. If we continue to drift lower last year's low could come into play at $5.11. As far as the upside, well, we need to make a run at $6.61 which seems kind of unlikely at this point. If mother nature cooperates I think that the $5.11 could be a target to run for. It certainly feels that way in the options pits on the floor. Put plays are still the flavor of the day.

Let's keep watching this old/new battle. It has been very interesting as of late with a lot of the traders I know backing away because of the volatility.

Speaking of volatility, the VIX index (fear gauge) had previously settled above its 200 day moving average only 3 times this year and it now has settled above that mark the last 4 days in a row. That is telling me we have some serious concerns in the equities. Let's keep an eye on that one.  

[lln50nwin]

Yep run at $5.11 spoken like a trader1

[ShelladyOptions]

$5.11 is vulnerable. Do I want it to go there? Heck no. But with Dec around the 544 level and some early bullish news with the weather out already, I would have liked to have seen us higher. Just trying to prepare myself.

[too close for comfort]

The thing about these traders is they are not trying to figure out what is going on with supply and demand. They know very little about growing anything, Their job is to make money, and to do that they have to try to out wit another trader that knows just as little about ag. 

[Kstater85]

 I think you have little appreciation for how hard the traders work to figure out production and demand.   I will tell you from first hand experience that they know more about national production and demand than 99% of farmers.   Farmers are experts at there particular location.  Those particular locations rarely have impact to the broader market.   The one thing that I think corn farmers in North America are having a hard time coming to grips with is that they don't matter as much as they used to in the world pricing model.  This is simply because they are not as big a portion of total corn production as they used to be.   in the last 15 years we have gone from 75% of world trade to 25%.

[Shaggy98]

I understand the percentages K-State, but how does that figure in total bushels? Do bushels run hand in hand with percentages?

[Kstater85]

In 1995 USA grew 188MMT and the rest of the world grew 328MMT of corn.   In 2012 we grew 274MMT and the ROW grew 578MMT.

[Hobbyfarmer]

OK we went from 57% to 47% NOW what did the population of the world do in that same 17 years and where did it do it? Here or R.O.W?

BTW is there a reason you picked that exact time frame?

[c-x-1]

U & Z unable to fill "breakaway" gaps (yet) yesterday or today may be something for traders to consider, Scott.

[Kstater85]

I picked it because that is the chart I had.  No reason.   Trend is in place.   What the production trend doesn't show is even though we have lost only 10% market share on production we have lost much more than that in world trade because we have increased use here on ethanol.