Some Good News For Corn

[rayfcom]

Weekly Export Sales data just released for the week ended September 20, and for the second week in a row the Export Sales were significantly stronger than expected. The expectation was for 900 to 1300 thousand tonnes of corn, the actual result was 1712.8 thousand tonnes. This follows last weeks reading of 1383.7 thousand tonnes, and is more double last years 814.1 thousand tonnes.

There is a serious caveat to these export numbers...there is a growing suspicion that the corn trade is being front-loaded, that is to say that buyers and sellers are trying to transact as much commodity business as possible in items that will or even may be affected by the coming imposition of tariffs by the US and other countries around the world. The idea is to perform transactions now that you know you will need to do at some point anyway, while prices remain unaffected by tariff imposition.

The message therefore is that while Export Sales are strong now, market participants may simply be performing some transactions that ordinarily would be done later in the calendar cycle if not for the prospect of coming tariffs. Which means that any positive effect to corn price that we see now may be reversed in a month or so when Export Sales retreat due to the implementation of the announced tariffs. 

My feeling is that this whole tariff situation increases uncertainty and risk to prices over time. As such, the positive boost prices are seeing now as market participants front load their corn transactions prior to tariff imposition should be taken advantage of by selling into the price surge. if indeed this rise in Export Sales is tied to the timing of tariffs, you can expect a reversal in prices in the coming months since the demand ordinarily seen in the later months of the seasonal cycle already has been used up.

[lsc76cat]

or maybe somebody just thinks the bottom is in.

[rayfcom]

That would be a foolish assumption.

[timetippingpt]

No more foolish that assuming the tariff situation is bad for prices. It really depends on things that are unknown. It could be good for prices just as much as bad, plus there are billions betting your way already. 

THUS....it is more than rational for Isckitty to suggest the user thinks corn at least is at fair value. After the ridiculous basis values that are in place, because of the fear of those tariffs  (none of which could effect corn btw) cash corn is clearly cheap and thus isckitty is not being foolish at all.    🙂

[rayfcom]

I have written here that I agree that the tariffs in the long run will not affect prices for corn, but in the short run there will be irrational assumptions about how the tariffs will affect prices. 

There are numerous and very credible reasons to doubt that a bottom presently is in for corn prices. While there is a chance that such may be the case, the risks (which I have delineated and explained in this forum) presently are strongly tilted toward a further decline in corn prices for the near-term. Which is why I think its a foolish assumption that the bottom has been found.

Just to give you one example, volume and market participation have both been shrinking since the upmove in price that started last Thursday. That is not indicative of a market that is attracting new buyers, but rather a market that is seeing contraction of participants. What that means is that as price has risen, fewer buyers have been attracted. That is the canary in the coal mine that tell should tell you that the present price levels are unsustainable. 

Now should the fundamental supply/demand equation change, or should the technical factors that provide insight into the overall market sentiment for price become positive, then there will be reason to support a positive view for where prices are heading. But for now, long is wrong.

But hey, that's why they play the game. Time will tell. Its been my experience that when the wind is blowing in your face, its best to turn around before you expectorate. And I think that is a very good analogy to answer the claim that the low is in for corn for the near-term.

[sw363535]

Dancing around the punch bowl

[rayfcom]

Its not dancing, its the proper way to evaluate a dynamic market in real time, keeping an open mind to let the evidence guide your trading decisions.

[roarintiger1]

Wow...nobody's thought of this......maybe the thinking is that either the harvested acres are lower or the corn is not quite as good as USDA predicts thus leading to higher prices as proof comes across the scales.  Corn is currently on sale....at bargain basement prices.  Everybody loves a sale.

[rayfcom]

If corn was presently on sale as you claim, then why it it that the days when the largest volumes have traded have been on days when the price has declined ?

If corn was presently on sale as you claim, then why are you still able to buy it at prices within about a half dollar of the lows for the last eight years ? 

Is it that most of the market is wrong except for you ? If so, I warn you that its a very dangerous attitude for your financial health to ever think that the market is wrong. 

Caveat Emptor...

[sw363535]

Assumptions are so easy
No evidence that supports claims.....
Exports of beans have yet to stop as reported by “advisers” all summer.
Prices falling are blamed on tariffs. Yet to happen...

There has been no better example that our markets are totally corrupted and anyone spouting “changes in supply or demand” when prices rise or fall is a blind idiot or part of the problem.
It is an election year .... we most likely will see some unwinding of large paper sales involved in anxiety marketing disorder trades after November.
Obviously we trade far more paper bushels than even usda can raise.