Are the corn bulls on the retreat?
Aug 24, 2010
The corn bulls woke up to a bearish market and could not stop the slide today. I expect the commitment of traders report will show some general long liquidation as key technical support was taken out at $4.25. Looking forward I have to suggest a correction of more than $4.06 should be difficult prior to the September USDA Supply and Demand Report. This is a 1/3 retracement of the recent rally. A 50% correction of the June to August rally falls clear back at the $3.90 level. This level of a correction will require the September report to confirm yields at or above the 165-bu. level.
Beans and wheat broke today, but percentage wise the corn market was the clear winner for the bears today. I would not be surprised to see a modest technical bounce tomorrow or Wednesday but then a retreat to the lows by Friday as expectation of harvest pressure starts to creep into the market.
As for watching our input cost exposure, I am hearing reports that producers are having difficulty locking up next year’s fertilizer prices. Concern of growing corn acres has many supplies reluctant to quote a price in some areas. If the corn market is able to post a correction in the December contract to the $3.90 or lower level we strongly encourage all end users and corn farmers to buy corn to protect up side risk exposure.
We would also like to point out the 10-year T-Note is on the advance. Talk of reduced home sales are causing great anxiety for the markets in general. If you have not talked to your banker about refinancing your home or business interest lately I would strongly encourage you to do so. Many banks have long term house loans down to 4.5%.
Finally, the crude oil market is retreating under pressure from the concern that the domestic and general economy may be slipping back into a secondary low. Producers should be watching oil for signs of a fall low to lock up next spring inventory needs.
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