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Optimism denied-Rich Nelson

06/24/2011 @ 4:41pm

Today is Friday. Many were looking for profit-taking from the recent selling. From the first moment of trade, selling was present instead. This time, funds sold despite giving a sign yesterday that they might be ready to take the sidelines. 

Since the June 9th report, buyers have attempted to come into this market with optimism but left disappointed. On the optimistic bullish side it can be said that June is the end of a quarter and when July comes around, there is a chance the fund selling will stop. 

It can also be said that perhaps a surprising amount of acres and/or quarterly stocks will be lost on the June 30th report. Our concern is still leaning the other direction towards the USDA adding acres, however. What should also be watched is the US dollar. That market has tested the 100-day moving average to the upside three times recently. If that average is taken out, it would be the first time the dollar has broken that line in its current downtrend which would be a bullish sign. 

With the amount of selling corn has endured recently, this market does not need to see the dollar show signs of turning higher. When it comes down to the bottom line, corn is definitely in a downtrend that will need substantial bullish news in order to change that trend. 

December is now the lead traded month which means any speculative liquidation will happen quickest in that month. Hedgers have had the luxury of December moving slowly while July has been speculated but that is no longer the case. Hedgers still need to draw a line in the sand where they will move in and sell. Bulls will want to take quick profits on longs until the downtrend line is taken out (612). 

Direction: There is no doubt that corn is still in a downtrend. There have been signs in this market which have suggested buying opportunities but those have recently been disappointing. We will now look for the selling to continue unless this market is given bullish enough news to break that trend. For December, that downtrend line crossed at 676 today…Ryan Ettner


Trade recommendations: 

·       Stand aside 

Closed trades: 

·       (6/23) Sold December corn 635 ∏, risk filled 650 on 6/24 for -$750. 

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