Can Corn Keep the Upside Momentum?
Feb 06, 2018
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY 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.
March corn set a new high for the year after a big sweeping reversal higher. An improving export picture and concerns about the safety of the stock market helped to encourage buyers. The technical action was quite positive on a chart, but can corn keep the momentum to the upside?
Corn started the week under pressure with a slightly less threatening (cooler, wetter) forecast for Argentina and a significant amount of producer selling. However, export sales to Japan and Unknown on the daily wire helped to boost confidence one again. While corn still remains behind the pace needed to hit the USDA's export projections strong sales in recent weeks is encouraging and helping to catch up. It is also impressive that global end-users are still willing to buy at higher prices suggesting that US corn is still a good value.
Better exports were not the only factor at play on Tuesday's turnaround as it seemed that money flow was coming into grains in a big way. After the Dow Jones Industrial Average saw largest one day drop in history on Monday there was a significant amount of buying from the large speculators with the funds buying an estimated 18,000 contracts of corn. This could be because outside money feels unsafe in the equities market and is looking for something that is a value and/or large speculators with short positions in the market want to get out to reduce overall risk.
Sign up for our Morning Ag Hedge newsletter! Sign up here: http://www.zaner.com/landing/ag_hedge_newsletter.asp
Going forward it will be interesting to see what corn can do from here. Technically the large sweeping reversal higher day and the new high close for the year are positive. This could encourage more technical buying from the funds. But, are the looking to build a long position when/if they cover the rest of the short position? Strong sales are encouraging and suggest global buyers are comfortable at current prices. The lower US$ has helped US corn stay more competitive.
But, higher prices or a stronger US$ could hurt exports. Funds may not be willing to build a long position. Corn acreage could be constant or higher. Can soybean prices hold on in the face of very disappointing exports? Most importantly the US producer has a mountain of corn yet to sell... While it is not impossible to imagine a path for corn to continue to rally it seems that therecould bea lot of cards stacked against it. Producers may want to be looking to sell old crop corn bushels and look at next year as well. There are ways to reownership.
They're here! We have complimentary 2018 commodity reference calendars available. They are a little bigger than pocket sized and very useful if you follow markets. You can sign up for yours here - http://www.zaner.com/offers/calendar.asp (Shipping to the US only)
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.
March Corn Daily chart:
March Soybeans Daily chart:
March 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 email@example.com
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.