Last week I advised traders “The market appears poised to continue higher, but not without some selling pressure from time to time.” That’s exactly how this week started out with a small sell off on Monday and Tuesday followed by a 3-day rally. At the time of this writing March corn is trading $5.83 with a high of $5.86 3/4. Today’s break above $5.83 ¼ is a minor break out to the upside after 2 days of market consolidation. Traders should watch for another push to break above the major trendline (see red line on chart below) if that happens, I believe it will, the market should push quickly to the $6.00 area. I remain bullish and look for the market to continue to trade inside the bull channel (see shaded area on chart below).
The “big picture” numbers remain the same and probably will for some time. I firmly believe a break below $4.96 could give the bears control of the market and a break above $6.39 ½ on the upside may have enough bulls behind it to propel corn to all-time highs. There are several minor areas of support and resistance inside this range that can help with short term market direction if violated. Call me directly at 1-800-367-7290 for more in-depth discussion on these numbers and to discuss trading strategies specific to your situation.
I would suggest using an option strategy to manage your futures position risk or an outright option strategy. Implied option volatility has come down quite a bit from its most recent highs mainly due to the consolidation and tighter trading ranges. I have 25 years of grain market experience, feel free to call or email with any questions you may have. Be sure to check out my archived weekly grain market insight articles posted on our website.
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