Can Corn Break 4.10?

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

After a sharp break in corn prices late last week corn is back within 5 cents of challenging highs. Bullishness surrounding the corn market continues to grow despite last Thursday's first look at the USDA's less bullish than expected domestic balance sheet. With some more planting delays possible corn has found its mojo again. Can corn keep the rally up?

On the May 10th WASDE report the USDA estimated a 1.682 billion bushel US carry over for corn. While this projection was above the average trade guess by over 50 million bushels it still represents a sharp drop in stocks year over year and one of the least burdensome ending stocks figures we have seen in recent history. The global stocks number is expected to drop significantly as well with a huge cut in China stocks and lower US.

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For exports the USDA has next year forecast to fall 125 million bushels from this year due to increased competition from Russia and the Ukraine. However, we think this could be underestimating the effect of issues with South American production. Argentina has had major struggles with hot and dry conditions and crops have suffered because of it. Brazil is now having issues with their second season crop which is the lion share of their corn crop.

With prices strengthening while corn planting progress is moving along we could see some extra corn acreage on to op the 88 million acres the USDA reported in the planting intentions survey. Some private estimates (including ours) are closer to 89 million acres. While this could create a bit of a weather cushion it will not offset more than a 2 bushel departure from the USDA's trend line yield at 174.

It seems likely that stocks in both the US and the world have peaked and are now starting to trend lower. This suggests that low prices have once again been the cure for low prices and the worst of the news may be behind us. This story could change quickly if this corn crop is able to set a new record national average yield or if global issues effect demand in a big way. It should be an interesting growing season. Stay tuned.

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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Find me on twitter - @thetedspread

July Corn Daily chart:

July Soybeans Daily chart:

July Wheat Daily chart:

Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 ortseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at:http://markethead.com/2.0/free_trial.asp?ap=tseifrie

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.