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.
Regards,
Joe Vaclavik
(312) 462-4438
Futures and options trading involves risk of loss and is not suitable for everyone.
