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Corn in review

To look back on the year, we had major fund investment that was larger than 2008. Corn followed that up by seeing liquidation back down to just about 100,000 contracts based on a floor estimate only to buy it back slightly at the end of the year. Corn spent the entire 2nd half of December rallying. This makes it the 7th year in a row this market has done that. Looking back on those same years, for future direction, is not so clear. Last year saw active selling to start the New Year only to see a bullish Jan report putting corn back on track higher. In 2009 and 2010 corn continued the move higher in January only to see the Jan report crush each rally. Going back one more year we see that in 2008 we rallied on heavy fund buying where the rally remained strong straight into the summer. This tells us that future direction is not so clear cut as the 7 year streak we see in December. We should look to start next year with most traders positioning where they want to be going into that January 12th report. Tuesday morning will still have heavy focus on weather but the following week and a half will have traders buying or selling based on report expectations. There is no Monday night trade so the next trading time will be Tuesday at 9:30. At that time there is bound to be new thoughts on South American weather and that will start our new year.

Year in Review: Commodities, as a whole, declined 8% this year. Of the grains, corn did the best as US yields were problematic for a second year in a row. As it stands now the trade assumes higher production will be coming in 2012…Rich Nelson 


Trade recommendations:

(12/28) Sell December corn 574 stop, risk 8 cents from entry, objective 555.

For the short term news, traders are still waiting to hear about cash cattle. Nebraska traded numbers at $202 which would be steady. The real question here is the Kansas through Texas trade. Last Friday it was not until early evening that trading began. Even then, volume was light. The same is expected today. This time, we look for steady to lower prices. For the year as a whole, 2011 was a big success. This chart shows cattle was one of the few big gainers of the commodity complex. This year’s drought, on top of already reduced supplies, was a key issue for the industry. On top of that, consumers surprised us with their appetite for beef during the turbulent political and economic problems. For 2012, we look for more of the same!…Rich Nelson


Trade Recommendation:

(12/22) Buy February 120.50, risk 118.90, objective 125.00

Working Trades:

(09/07) Sold 2 April 118 puts 2.57 each, risk to 2.20, objective 0. Closed .95.

(11/23) Sold 1 February 118 put 1.60, risk to 1.70, objective 0. Closed 0.60.

(11/23) Sold 1 April 122 put 2.67, risk to 2.80, objective 0. Closed 1.87.



Rich Nelson 

Director of Research 

Allendale Inc. 

4506 Prime Parkway 

McHenry, IL 60050 


Hypothetical performance results have many inherent limitations, some of which are described below.  No representation is being made that any account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.  One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.  In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.  For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses are material points which can adversely affect actual trading results.  There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

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