Selling Resumes After Yesterday's Pause...
Jan 18, 2012
· Grains down overnight as technical momentum builds; Yesterday was an “inside day” as far as the corn charts are concerned, indicating that it may have been just a slight pause in downside movement
· One analyst noting that open interest in corn has only dropped 2-3k contracts on recent 50 cent break, whereas OI increased by nearly 70k since the beginning of the rally in mid-Dec; This may indicate that more liquidation is to come
· Outside markets mostly mixed, US$ slightly lower, crude/equities higher
· Significant rains aided many of the drier areas of Brazil/Argentina last week; Still, significant damage has been done to pollinating corn
· Many traders debating validity of recent USDA report, Many different types of “conspiracy theories” as to why gov’t would want to keep prices depressed exist; Some believe gov’t wants to keep prices during Feb when crop insurance levels are set
· China consumption of grain expected to increase by 2.9% from last year to 585mmt
We’ll remain bias to the downside this week, expecting corn to test mid-Dec lows in the 580s; Long term we’ll call ourselves neutral to friendly the ’12 crop, and outright bullish old crop. Wait for a good break to buy and re-own any cash sales made at higher levels. We believe that producers will have a better chance to price Dec ’12 corn sometime in the late Feb to early March timeframe. Stay tuned for new recommendations.
As always, call the office with questions or concerns.
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