With a major Chinese property development firm on the possibly verge of collapse, December corn had a rough start to the week like most commodity and equity markets but has since rebounded very nicely. Yesterday we set the weekly high at $5.31 and at the time of this writing we are “knocking” on that door trading just a few cents under. Below is a weekly December corn chart, as one can see, this week December corn is trading inside last week’s price range. If it closes out the week this way (and I think it will) next week’s key short-term numbers to watch will be $5.38 ½ on the upside and $5.06 ½ on the downside. I would recommend traders take their cue from the breakout. According to the Crop Condition and Progress Report that came out Monday, not much has changed. Good to excellent levels remain around 59% with about 10% harvested. With the wild, mixed weather patterns we saw this year in the corn belt I think yields will be the wild card going forward and traders should watch intently as numbers start to come in. Based on what I have heard to date I think we may see the USDA revise yields lower which should be supportive for corn as we head into fall.
Watch December corn at $4.96 on the downside vs $4.99 and $6.39 ½ on the upside – basically a breakout on the May monthly chart. There are several minor areas of support and resistance inside that range that can help with short term market direction if violated as I mentioned above. Call me at 1-800-367-7290 for more in-depth discussion on these numbers.
I would suggest using an option strategy to manage your futures position risk or an outright option strategy. Implied option volatility recently came down but 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.