Can Corn Hold Recent Gains?
Apr 14, 2016
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
In the last few trade sessions corn has managed to rally almost 20 cents after a sharply lower day on Monday. Corn has benefited for spill over strength from soybeans and wheat and has found support from talk of dryness in Brazil. Now that corn is over 25 cents off of lows will it be able to hold this recent strength?
While soybeans rallied about 50 cents in 5 trade sessions corn had a little more of a roller-coaster. After a sharply lower Monday corn found buying interest and joined the rising tide in grains. Large Speculators (funds) became concerned by the strength in the soybeans and started to cover some of the large short position in corn and wheat. Adding fuel to the fire there is now a growing concern with the hot and dry conditions in Brazil affecting the second season corn crop.
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With a good weather forecast for the US corn belt however it looks like there will be aggressive planting in most areas in the next 10 days. The good outlook for planting could start to weigh on the corn market as a fast pace of planting may mean that we are getting most of the intended planted acreage. While a sharp gain in soybean prices relative to corn since planting intentions surveys were taken could have some producers thinking about making some last minute switches toward soybeans, it might be difficult to stop planting corn if conditions are good.
From a technical standpoint on a daily chart corn has broken out above the shallow down-trend line that has held corn in check for some time. On a weekly chart corn is also breaking the shallow down-trend line but will need to see a close above it to confirm. If this were to happen the technical traders (funds included) may be looking to buy, or at least cover short positions.
Longer term there are still some weather concerns for the upcoming growing season. There has been a lot of talk in recent weeks about the possibility of La Nina transitioning into an El Nino creating hot and dry conditions in the corn belt. We also continue to see consistently good export sales for corn. And, these topics have been talked about a lot as corn prices have rallied in the last few days. While these are issues that could have a big impact on the corn market in the long run they may not be actionable at this point.
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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit. Follow me on twitter @thetedspread if you like.
May Corn Daily chart:
May Soybeans Daily chart:
May Wheat Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.