Corn market shifts its tone this week
Jun 18, 2009
The last week has been a rough one for the speculators and a great week for the hedgers. The overall tone of the market has shifted significantly from one of concern about inflation back to the individual fundamentals of the commodity. I have been talking about this risk but frankly I did not believe it would occur this early.
I have to say the bulls have been hurt badly for a while. It’s going to take time to recover their confidence. While I do believe the acreage report will be down 1.5 or more million acres, it’s going to be offset by the improving crop conditions and positive dollar pattern. This implies to me a price bounce of more than 50% of the recent week decline or 27 cents off the low or around $4.46 is just about all one should anticipate.
The eventual correction is expected to materialize between the August and September USDA Supply and Demand report with a maximum downside risk of $3.75 in December corn. I anticipate there will be significant scale down buying of feed needs and speculative needs at that time.
SUMMARY: Any speculative long positions recently place should be held for a price bounce into the Acreage report but one should be out before the July Supply/Demand report.
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