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Corn Futures Market Analysis

Free in-depth market analysis on the Corn futures market written by a professional Corn futures trader.

August 17, 2013

Corn Futures and Options Trader, Van Commodities, Inc.

From the May 9 intraday high of five dollar and fourteen cents the December Corn future (CZ14 )at the Chicago Mercantile Exchange (CME) traded down roughly thirty-one percent into the lead up of the USDA Crop Production data on Tuesday August, 12. The intraday low on Tuesday was hit shortly after the data release at three dollars and fifty-eight cents per bushel and the contract reversed direction shortly after the information hit traders screen’s, scoring an outside reversal day to the upside.

Expectations, on average, for the USDA production report were for a yield of one hundred seventy point two bushels per acre and a crop of fourteen and a quarter billion bushels. When the USDA reported an expected yield of one hundred sixty seven point four bushels per acre and production of just over fourteen billion bushels, profit taking unfolded and market participants rallied CZ14. Although there is a good possibility for the corn crop to increase in size due to the favorable weather conditions during the crops pollination phase; the contract closed on Friday at the top of its weekly range, thereby scoring an outside week reversal to the upside.

CZ14 may continue to trade up over the near term. Although several momentum studies are still oversold on longer term studies, shorter term momentum studies will soon move into an overbought condition. Over the near term CZ14 may find initial support at 3.69-3.72 with further support at 3.63-3.66. Over the longer term resistance may come in at 3.92-3.98 with further resistance at 4.10-4.18.

May 16, 2013

Corn Futures Broker, Van Commodities, Inc

The Cattle on Feed report (COF) released after the close of the futures markets Friday was more bearish than expected. Placements of one hundred fifteen percent for April 2013 were three percent above the average estimate; On-feed came in seventeenths higher than expected, at ninety-seven percent and marketing’s were nine tenths below at one hundred and two percent. Although placements were high relative to last year, 2012 placements were small and the reported placements for April 2013 came in lower than placements in 2011.

The Feeder Cattle future for August (GFQ13) has traded down six percent from its intraday high on April 26. The question for traders is whether the market already priced in the bearish COF numbers reported Friday. From a chart perspective, GFQ13 needs to rotate back up and close above 144.00 quickly to give bullish traders some hope.

GFQ13 is oversold based on several short and intermediate term momentum studies. Trade on Monday may give market participants a clue as to how feeders will trade over the next few weeks. If GFQ13 can disregard the negative COF data and reverse the downtrend that has been in place over the past several weeks, feeders may catch a tradable bounce. GFQ13 may find initial support at 141.00-143.00, with longer term support at 135.50.  If the contract catches a bounce initial resistance may come in at 147.50-148.50 and longer term resistance at 151.00-153.50.

April 02, 2013

Corn Futures Trader, Van Commodities, Inc.

Selling of the old crop corn future (ZCK13) seemed to abate somewhat today. After trading down roughly one dollar on an intraday basis, since the bearish USDA Grain stocks data on March 28, ZCK13 appears to be consolidating the losses. The unexpected 386 million bushel increase in stocks will possibly continue to weigh on old crop corn into the foreseeable time frame. The potential for an increase in corn ending stocks in the April 10 USDA crop production report should limit bounces. The overall trend in ZCK13 appears to be down, with potential selling not far above. Weather forecasts for April appear to be conducive for new crop planting with normal precipitation in general, but with some disruptions in parts of the Delta and Southeastern states this week.

ZCK13 is oversold based on several short term momentum studies. The contract may find some short term support in the 6.35-6.40 area, but with the overall trend seemingly being down ZCK13 may find initial resistance at 6.55-6.60 and stronger resistance at 6.73-6.80. Over the intermediate term we would possibly look at the 6.00-6.10 area for a tradable bounce, depending on the technical and fundamental features of the market at that price point.

September 29, 2012

Corn Futures Broker, Van Commodities, Inc.

Corn basis the front month contract (CH13) continued to be undermined by negative demand news on Friday. Export sales of 104,300 tons came in below the lower end of market expectations at 150,000-300,000 tons and continue to be well under the level needed to reach the USDA’s yearly sales estimate. Uncertainty about corn demand for ethanol is also leading some market participants to question whether the USDA’s current annual demand forecast will be met.

Going forward traders will be looking to the USDA Production and Grain Stock report January 11 to see how the Government will account for the early harvest and whether acreage abandonment has increased. The question over how the USDA will deal with several line items of the Corn Balance Sheet could lead to volatility as traders try to position their books ahead of the data.

CH13 is oversold based on several momentum indicators on both a short and intermediate term basis. The trend for corn still appears to be down and the contract may need to get to 6.50 before good support appears. Prior to that objective being met interim bounces may find initial resistance at 7.08-7.25 and further selling at 7.27-7.40. In the near term minor support may appear at 6.78-6.85 and solid support should appear at 6.39-6.50.

Futures Trader, October 28, 2012

Several unanswered questions in the corn market have kept price action trapped in a seventy-five cent range over the past month. A major concern for many traders is whether the USDA has reported a realistic level of acreage abandonment for this year’s corn harvest? Many traders believe that the USDA will have to reduce harvested acreage further, thereby reducing corn carryout for the 2012/13 marketing year, resulting in a further reduction in the already tight stock to usage ratio of 5.6 percent. A second concern for market participants is the slow start to planting of the South American crop which has been delayed because of to much rain in parts of Argentina and Southern Brazil and not enough rain in Central and Northern Brazil. A third question is how much corn Brazil has left as an alternative supplier to the U.S., over the winter months, for Global grain markets. Many believe that by the middle of December Brazil may not have product to offer. It would seem that the corn market will continue to trade off of technical support and resistance levels until a better view of the fundamentals can be arrived at, as the factors above as well as several other issues come into better focus.

Corn basis the December front month contract (CZ12) has been trading between 7.05 and 7.75 for the past month. On a short and intermediate term basis several momentum studies are in neutral setups. CZ12 needs to find buyers in the 732 -734 area or a retest of the 7.22 level may occur before buyers reappear. A close below 7.32 would bode poorly for CZ12 and a retest of 7.05 would not be out of the question. Should buyers appear in the 7.32-7.34 initial resistance comes in around 7.60-7.63 and then 7.70-7.77.

Corn Futures Broker, May 6, 2012

On the back of strong export market demand, Gulf basis levels were trading significantly above the corn futures in Chicago on Friday. CME May corn futures (CK12), which goes off the board May 14th, has traded up 70 cents from $6.00 thirteen days ago to an intraday high on Friday at 6.74, before closing the week at $6.62. During the same period July corn (CN12) has only rallied 26 cents from the low on April 18, 2012. CN12’s outside reversal day to the upside on Friday looks like the contract may have further potential on the upside. One of the risks to several commodity trades next week will be how the U.S. Dollar trades in reaction to the French and Greek elections. The outcomes may result in a risk off environment for markets in general.

If CN12 has further upside, initial support for the contract should come in around 6.08 and then $6.00. A break below 5.92 would potentially negate the view outlined above, which is based on the positive supply and export demand story for old crop corn. All eyes will be on the USDA Crop Production report scheduled for May 10, 2012 

March 13, 2012

Commodity Broker, Van Commodities, Inc.

Corn futures prices were mixed today on the Chicago Mercantile Exchange, with old-crop months supported by tight supplies and confirmation of yesterday’s rumored 240,000 ton sale of US corn. Old crop’s powerful rally, since the reversal low on Fridays perceived negative USDA Supply Demand Report, has taken the July Corn contract (CN12) back up to trend line resistance around 6.65. CN12 twenty-nine cent rally from Fridays low to today’s high led to some profit taking going into the closing bell.

The narrowing trading range for CN12 appears to be 6.30-6.70. With a strong basis and backwardation still working for old crop, CN12 appears to have good support below the market. A move above 670-673 could give CN12 a boost toward 6.95 and higher.