The Post-Holiday Market
Jul 07, 2010
We are now into the post-holiday period when everybody comes back from a few days off after seeing some of the country. Today’s price action has everyone very nervous. The bulls are arguing the crop's not there with talk of carryover down to 1.1 billion, suggesting weather premium has to be put into the market. The big question on many producers’ minds is what to do with unpriced old crop corn. As you know, those following our recommendations have been sold for some time. Last week’s Acreage report really hurt my bearish position, but overall I’m still ahead of the game. At this time, I have to suggest the bull has to push into the USDA Supply and Demand report next week to get the bears out of the market. The market is moving above the 100-day moving average, which is an important price level for the trend-following funds, which are currently very short the corn market.
The short-term players are trying to drive the market up to force them out of the market. To my way of thinking, if the bulls can’t push December corn above $3.93 by mid-July, the force of old-crop corn plus an improving new-crop corn will start to seasonally drag corn lower into the fall. As for how far we will go right now, it really looks like the $3.40 level basis the December 2010 corn will hold things in check. As for the upside, with carryover potential below 1.1 billion, one has to suggest prices would have to be higher during the March to May time period next year to attract acres. This would suggest the $4.50 level could eventually be in the making. This is why feed buyers and speculative buyers need to be very focused on buying in the August to September time period.
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