How much lower can corn go?

Published on: 12:54PM Jul 22, 2008
I was on the road yesterday down to Evansville Ind. Overall, the crops looked stronger than I expected.  My comments back in June was as soon as the corn got tall and we could not see the wet spots the corn market would be in trouble unless we had a lot of heat. Since June 27th, the break has been decisive and extremely painful for the bull but it has bailed out the bear or feed buyers wanting to get next year’s inventory protected. 
The issue now is how much further can we go?  I would suggest a close below the $5.95 level for Dec corn is the last good technical support the bull has. If this level is breached we could set up for a final long liquidation break which could push corn clear back to the $5.50 level. 
My bias is the corn crop yield is still very uncertain, but I must accept it’s not getting worse, the only issue is are we simply stabilizing the yield or improving yield prospects? In my gut I believe we will end up some place between 148 and 152. The trade I believe is trading as if it’s 152 and growing.  I’m working on the assumption that a 1993 strong fall price rebound is still a very strong possibility. This implies I want to become very aggressive about buying feed needs and reducing the size of my hedge position.  The exact timing is difficult but I would suggest shortly after the August Supply/Demand report to early September, one should have all long positions in place and significant reduction in the overall short position.
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