Panic buying and the market is unable to rally

Published on: 14:51PM Aug 15, 2008
After two days of sharp short covering and some panic buying by the bulls, the market was not able to rally. In fact we were lower on project (A) and the day trading session erased Thursday’s gain. Looking to next week, I would expect more cash inventory to be moving into the system as producers start to sweep the bins and prepare for next year’s crop. 

So have the lows been made? The December $5.05 low should hold as long as crude oil does not go too much below $110, U.S. yield does not go above 155 bu. per acre, and demand remains at USDA expectations. 
However, with all the influence of the outside markets, the primary mover for corn right now is still going to be WEATHER.  If we have a lot of heat and rain, one has to assume the lows could be taken out. If we have frost then significant upside risk exists.

What to do?
  I would continue to suggest next week is time for all sellers to adjust big short positions down to modest risk i.e. if you are short futures, consider moving into $5 puts. Equally if you’re a feed buyer it’s time to get your floor positions in place. Finally, for all producers who want to sell cash or short futures next spring or summer I strongly encourage you to be getting calls in place to defend your upside price risk exposure.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at [email protected] or [email protected].

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