Will corn prices continue there slide down?
Jul 29, 2013
Corn technicians are digesting the fact the SEP13 contract has now made NEW lifetime contract lows. The question is will the DEC13 contract follow suit, targeting the $3.98 area (current contract low)? A sub-$4.00 print certainly sounds scary, but with the funds tendency to be "repeat performers," meaning they like to stick with what is working, I suspect most technical bounces will be meet with more selling pressure by the funds. Personally, I believe breaking prices below $4.00 in the DEC13 contract will be tougher than many are estimating. Below are few cards in the deck that may scare some of the bears and keep prices from breaking in any real hurry:
- Funds - With the funds out of the long side, and most "indexes" exclusively buyers any legitimate bullish news could bring on more buying than normal with short covering and index buying.
- China - With China's wheat crop in jeopardy and corn stocks low, there is potential for explosive Chinese corn imports. Talk is USDA's current estimates could now be too conservative rather than too optimistic.
- Harvested Acres - Many traders starting to think USDA's harvested corn acreage number is too high. Some folks talking a 3-5 million acre reduction. I personally don't see anything of that magnitude, but I could see harvested acres closer to 88 million as opposed to the 89 million plus currently being estimated by the USDA. Hint: Keep your eye on the USDA's bean resurvey numbers. If the show a lot more beans going in the ground, the corn harvested acreage number will really fall into question.
- Early Frost - With pollination worries coming to an end and the crop planted so late, weather bulls will now start to focus on the threat of an "early freeze." I am not saying there will be one, but it might be enough of a worry to keep some of the short pressure sidelined.
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