After a solid finish last week December corn has pulled back slightly this week to a support area. Dec corn continues to trade inside the bigger range. It’s important to note that we are finally seeing a carry come back into the market as the September-December corn spread is trading around -8 cents, the best we have seen it since all year! The Crop progress Report that was released on Monday showed no change in the good to excellent category and stood at 60%. In last week’s article I mentioned “This came to fruition so far this week with corn gaining about 15 cents from last weeks close and I believe there is more to come next week.” So far, we have not seen any additional upside but we also have not seen a major failure.
In previous articles I advised the key numbers to watch were $5.81 ½ on the upside and $5.19 ½ on the downside but that was based on September corn. The key numbers, I believe to watch, for December corn are $4.99 on the downside and $6.39 ½ on the upside – basically a breakout on the monthly chart. Those numbers are based off December corn month of May high and low. Every month since then has been inside May’s trading range. There are several, what I consider, minor areas of support and resistance inside that range that can help with short term market direction if violated. 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.