Old, new-crop corn charts differ
Fundamental Support: When you look at the chart showing today’s trade, it looks almost exactly like yesterday. Corn started the day with a bounce only to spend most of the day setting back. March corn did a great job of holding 630 support once again today. With wheat trading lower, and the beans ending the day with a strong push higher, corn was simply stuck in the middle. Once again exports were found on the overnight dip towards support as Egypt bought 240,000 tonnes. New crop corn continues to have a chart which looks like a downside turn has been made. Old crop continues to hold support but has run out of room and needs to stop the slide right here. It is nothing short of amazing how different those two charts look. Hedgers should be concerned with support being broken leaving next December support at 547. Those waiting for a spring bounce will do no good to get a 30 cent bounce if this market slides 40 cents first. Unless there are changes to the weather forecast there is little to argue with the current thought of big acres and good yield until the March 30th acreage report. As a whole, this market needs to see more regular exports like today to keep general support. Bulls can be buyers of old crop corn at or near 630 support. Bears will want to be sellers of December on just about any bounce but especially so up near the high 570’s.
Ethanol Exports: With the aggressive pace to ethanol production through December, ethanol makers have been sending the extra amounts to the export market. In November, 12.5% of our production was exported.
(1/24) Sold March 630 straddle (1 630 call and 1 630 put) at 41 1/2, risk to 70, objective 0 or exit at option expiration. Closed 20 3/4.
(2/1) Sold March 660 call at 11, risk to 21, objective 0. Closed 2 5/8.
(2/6) Bought March 650 put at 18 1/2, risk to 10, objective 36. Closed 24 ≤ (exit at 24 ∏ Sunday night)
Though chicken stocks are 22% lower than last year, at the end of December, stocks of the premium product are only 4% lower. Until we get this category of stocks down we cannot suggests wholesale pork or beef prices are ready to make the next leg up. We expect this situation will be cleared up by around April. For now, we are happy with the cash hog and cash pork gains made so far. We will hold our neutral stance on hog futures.
(2/7) Buy April 86.90, risk 85.40, objective 90.80.
(1/26) Sold 1 Apr 86 put/sold 1 Apr 95 call 2.75, risk to 3.25, objective 0. Closed 2.00.