After some consolidation on the daily December corn chart last week the market broke a bit lower this week but appears it may be finding support around the 200 day moving average (see chart below) couple the 200 MA around $5.04 ½ with the monthly May low $5.00 ¼ I mentioned in several articles and the market appears ready for a major move. Tomorrow’s USDA numbers could be the catalyst to break this market lower or could cause this market to take off like a rocket. As I see it most of the negative news has been “baked in” to the current prices so in order to break it lower we will need to see some rather bearish numbers otherwise look out, we could see a nice pop. USDA Supply/Demand and Crop Production will be released at 11am cst tomorrow. If you would like to receive RJO Insights right after the Reports are released please email me your contact info and I will add it to my distribution list.
The key numbers I think that are relevant 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.