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Sellars Push Corn Volatility Levels to Yearly Lows

Investors want to stay short the corn market.

After taking just one day off the corn volatility, sellers were back to selling vol aggressively. This pushed implied volatility back to year-long lows.

This type of trade has caught so much market attention that we are starting to see other market analysts mentioning this, including some who might otherwise be stock market traders.

It is certainly a big story when you have stock companies pointing out the current situation in this market.

Once again, this means that December will have a hard time separating far from $3.50 per bushel until a larger-scale piece of news is seen. Exports were on the positive side today, coming in at 1387K when trade expected a high end range of 1200K.

For the week, both the ethanol and export markets were better than expected. However, they were not large enough, yet, to convince volatility sellers to exit their positions.

For the short term, we can continue to expect sideways movement until fund short covering is seen or volatility traders exit their trade. Longer term, it has been suggested more heavily from various groups to look at long options for an eventual, if delayed, bounce in this market from a larger bullish story yet to be seen.

Bulls

  • Exports came in at 1387K when trade expected a high-end estimate of 1200K.
  • For the week, both ethanol and exports were higher than expectations.
  • Bulls still need to see a larger-scale story to convince the two groups in this market (Vol traders and funds) to exit their trades.

Bears

  • Sellers can continue to have confidence in sales above 350 counting on Vol trading and a lack of bullish enough news to cause a breakout.
  • The forecast clears off for most harvesting areas over the next 10 days to expect a solid bounce in harvest pace Monday.
     
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