Failure to move higher in Corn should move markets lower after November options expire

October 21, 2016 10:17AM CDT

Private analytic firm Informa Economics pegged 2017 corn plantings at 90.971 million acres which would be a 3.7% decline from this year. Break even economics and normal rotations lean to more soybean acres for next year. This year’s harvest is the first without price supports in nine years and prices have fallen all year and are down more than 20% on the month. Overnight volume is very light with 5500 contracts of December corn traded. The U.S. grains council is talking with Vietnamese importers in the hopes of coming to a solution to the country’s suspension of U.S. shipments of dried distiller’s grains. Vietnam's ministry of agriculture said it would temporarily suspend all imports of US DDG’s due to contamination with beetles.

Ideas that the strong seasonal period has ended, talk of accelerating harvest for the weekend and into next week could continue to keep prices under pressure. December corn failed to close above the 100 day moving average yesterday and the market closed with an outside day lower close. Producers were active sellers on the rally and seasonal strength is running out of steam.

We still believe the market is range bound between 325 and 365. Aggressive traders can buy December corn for the day, looking for the market to be supported by Nov options expiring today. Longer term, should look at buying puts.  Support comes in at 346 and resistance at 356.

Corn Daily

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