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Strong week for corn market

11/04/2011 @ 3:34pm

First thing in the morning, the corn saw its Friday setback as expected. After the first hour of trade, the average estimate on carryout was released; this was enough to push the corn market back up to the resistance area. 

For corn, the average estimate is 147.9 yield compared to USDA’s October 148.1. More importantly, the average carryout was seen at 801 compared to 866 million bushels last month. That carryout number suggests a proper corn price in the mid to high 650 area which is where we saw this market quickly run to. 

This will change the perspective compared to what we have been seeing the last couple weeks. Instead of 630 being good support, which it still is, we now have to say that a dip down to the 640’s should hold this market over the next couple of days. Anywhere close to the 666 1/4 breakout area should remain as strong resistance. For the next couple of days leading into the supply/demand report we now have a new price to gravitate to and that is in the 650’s. 

This information should also help the corn to avoid following outside market influence, at least for Monday and Tuesday. For early next week let’s look for buyers to step in more quickly which will limit setbacks. 

For the November report we notice that the 10 year history of changes seem to have no bias which will leave most choosing to go into the report neutral. Extreme moves away from 655 in either direction can be traded the next two days but remain cautious about what number the USDA might throw at us Wednesday.

Yields: USDA usually makes the defining move on yield estimates in October. Don’t count on significant changes anymore. Demand is the real area to watch for changes.

This week was a strong one. The nearby futures contract, December, closed $5.45 higher. This is the largest one week gain in over three months. We chose to show a “weekly change” chart like this as typically after a big week of price movement, either way, prices are generally quiet the next. Right now, that would be hard to see. Cash cattle traded up to $124 this week. There is already talk that bids for next week will start at $125. The trade is pretty convinced Japan will announce a more favorable beef import standard in the future. We will not attempt any sales yet

Working Trade:

·         (09/07) Sold 2 April 118 puts 2.57 each, risk to 3.00, objective 0. Closed 1.50.

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