Over the last week, corn and soybeans have continued to consolidate while KC wheat had an outside week although at the time of this writing KC is trading inside last week’s range. Looking at the weekly September corn chart below, one can clearly see the degree of consolidation. In last week’s Grains Insight, I advised traders to watch for changes in Mondays Crop Condition Report. That report showed a drop in the good to excellent category from 65 to 64 which spurred a rally to the weekly high achieved on Tuesday of $5.64. At the time of writing Sept corn is trading at $5.48 which is about the middle of the weekly range. Based on the chart patterns I believe the numbers to watch are $5.25 on the downside and $5.80 on the upside – watch for a breakout and position accordingly. This week, the range for corn has been even smaller coming in at .27 ¼ cents. As I mentioned last week, historically we usually see corn sell off around this time of year but so far that hasn’t been the case. Watch for Mondays Crop Condition Report to see if the Good/Excellent rating for corn slips again or stays unchanged. August 12th is the next USDA Supply/Demand Report and Crop Production, traders should pay close attention to the yield number which in my opinion should be revised lower form 179.5 – that’s a tall order to fill in my opinion with all the problems we have seen this growing season.
I would suggest using an option strategy to manage your futures position risk or an outright option strategy. Implied option volatility is still relatively high compared to historical vol levels. You may want to incorporate some short options into your strategy in a calculated risk manner such as bull or bear option spreads. I have 25 years of grain market experience, please feel free to call me at 1-800-367-7290 for more details or to discuss in depth trading strategies. Also be sure to check out my past weekly grain market updates posted on our website.