Bulls are in Control!
Sep 07, 2010
It now appears last Friday was a record volume trade for the corn complex. The index funds have now moved close to 300,000 contracts long which is the highest since February of 2007. While there is still room to add more contracts, they already committed a lot to this bull move. The nearby December 2010 contract has now gone premium to the December 2011 contract by more than 12 cents which has not been seen since 2008. Remember, when a market takes away carry it’s saying it wants your grain now. Finally, one has to believe the most bullish estimate on yields are now in the market at 158.4-bu. per acre, which could project a carryover below 785 million bushels.
I have to say that the bulls have anticipated about as much a bullish report as one can expect. In fact, the risk is exactly the opposite, a bullish report and bearish reaction. The bulls need to remember harvest is going to come on sooner and faster than last year. So for end users wanting to get feed protection in place for winter and spring, I would suggest we have to use what limited correction we see in the month of September. Specifically, I would be setting time targets to be getting long price protection in place say the last two weeks of September to the first of October. I would strongly suggest you have all your buying done before the October supply demand report due out the second week of October.
How far can this market go? It really appears that a $5 price will be in store for corn for the first half of 2011. I however would remind everybody if the basis is hot at harvest and limited carry exists, you should really consider dumping the inventory and reowning in a limited risk long position for flat price gain.
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