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Pork exports to Russia threatened

12/08/2012 @ 7:30am

Leftover selling from Thursday’s poor exports was certainly seen Friday. In combination with that, this corn market finally saw its seasonal drop into the 2nd week of December. 

After a relatively strong week, it was starting to look like the seasonal break was not going to occur. March corn still has room to drop down to first solid support of 714 1/2. This tells us that both by a timing play and a chart approach there still is a little more selling until support is expected. 

The trade is also looking for a slightly bearish report on Tuesday which can make all this work together. Keep in mind that the December report is the last estimate and the January report are the final real numbers. 

Bulls might have a hard time making much of a case for buying ahead of the final December estimate. On the other hand, we fully expect bulls to make a case that the final January numbers are going to show the market the 2012 drought was worse than anyone expected. 

Bears still have a horrible sales report from yesterday with no signs of improvement on their side. Bulls will be looking at the seasonal turnaround along with having pressured prices low enough to pick up more sales on next week’s report. 

So far, for December, the seasonal trade has played out as expected, there is no reason to think it will not continue to work.

Higher Ending Stocks: The grain trade suggests USDA will recognize this developing problem with exports on Tuesday. On top of that problem, we have clear skies for Argentina next week (bearish) and the river falling (now -2.18 feet).


Trade recommendations:

(11/26) Buy March at 715, risk to 705, objective 740

Closed trade:

(11/27) Sold March at 760, objective hit at 745, +$750

Working trade:

(11/21) Sold January 740 straddles (740 calls and puts) at 32, risk 45, objective 15, closed 22 1/4.

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