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In this week’s podcast we go over our thoughts on the macro markets and then we dive into our game plan for corn between now and October. We see corn drifting lower until first notice day. Seasonally corn finds support between the end of August and mid September. The post harvest rally can happen during the end of Sept through October. If you want to hear what we are thinking and how we will trade it, make sure you take a list to Turner’s Take Podcast!
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Corn
Based on the latest corn conditions and weather forecasts, the market should be fairly confident in a decent corn crop this year. It remains to be seen how close the yields will be to trend, but it should be a couple of bpa +/- from 178.5. That is going to put new crop ending stocks between 2.5 and 3.0 billion. The funds will most likely sell corn between now and Sept Corn First Notice Day. Corn spread should widen too as old crop is sold to make way for new crop.
In the podcast we go over our game plan for being bearish between now and the end of Aug. Corn should bottom out between FND and mid September. The post harvest rally is usually late Sept through October. After that the market will start to look at South America for any kind of supply side issues.
Now that the corn crop looks like it will be “made”, the market is going pay more attention to estimated ending stocks and demand. The potential bullish catalysts are weather (hot/dry Aug or early freeze) and China. A weather market this late in the game is a low probability event. China buying corn could be a big deal but if I were them I would wait until the end of Aug/early Sept to by big. The Chinese have been very savvy buyers of soybeans and if they use the same methods for buying corn I would expect them to make bigger purchases as we head into the depths of harvest lows.
The path of least resistance is lower and Sept corn has the potential to trade $3.00 by the end of Aug, which would probably drag Dec to $3.10. For now we like being short corn. There will be a time to get long but seasonally it is not the right time to start buying.
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Continuous Corn
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Craig Turner – Commodity Futures Broker
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