Corn Prices To Fire Up on Rising Energy CostsIt is official. Inflation is back. But not everywhere. Food inflation is on the decline. All three major crops, Soybean, Wheat, and Corn have declined substantially. Bearish sentiments rings loud across agri with ample supplies combined with solid harvest expectations.
Among crops, corn has fared best. Its prices have not declined as much. Corn outlook is positive given South American supply uncertainty and gasoline linked demand spike.
Corn prices face downside risk from ample supply in the near term. Prices have the potential to spike during later part of the year due to supply uncertainty and higher consumption.
Traders can deploy a calendar spread in CME Corn futures comprising of a short September 2024 Corn Futures (ZSU2024) and a long March 2025 Corn Futures (ZSH2025) to gain from shifting dynamics.
RECORD US CROP WILL SUPPRESS NEAR TERM CORN PRICE
The US produced a record 389.69 million MT of corn last year as per latest USDA figures. Massive production is a result of record high yield of 177.3 bushels per acre.
Globally, corn production in the current marketing year is expected to reach a record 1,227 million MT, due to the US crop last year.
Higher supply is expected to lead to a buildup in ending stocks. Stocks are expected to increase from 302.19 million MT to 318.28 million MT. This represents a buildup of almost 16 million MT.
Ample supplies are a headwind to near term corn prices.
USDA ESTIMATES MAY BE TOO OPTIMISTIC
Global corn production forecasts by USDA may be too optimistic. Upcoming harvests from Brazil and Argentina may spring surprises to the downside.
USDA’s forecast for the Brazil corn crop is currently at 124 million MT. Brazil’s national agricultural agency - CONAB - puts the harvest at 110.9 million MT as per their latest crop survey . The difference stems from USDA’s assumption of higher planted area.
CONAB recently cut its estimate for planted area pointing to lower crop prices dissuading farmers from planting corn. Planting in Brazil is delayed from its usual schedule.
USDA is also optimistic about the Argentinian crop. It reduced its forecast for Argentinian corn by 1 million MT to 55 million MT in the latest WASDE report. However, that is still optimistic given the ongoing spread of spiroplasma disease. Last week, Argentina’s Rosario Exchange slashed corn estimates to just 50.5 million MT from a previous forecast of 57 million MT citing crop loss linked with diseases.
USDA estimates are 18 million MT higher than harvest forecasted by regional agencies across Brazil & Argentina. Corn supplies may end up being much tighter than the USDA is currently forecasting if harvests come softer than anticipated.
ETHANOL PRODUCTION IS LIKELY TO INCREASE CORN CONSUMPTION
USDA increased its forecast for corn consumption for ethanol production by twenty-five million bushels (635k MT) in the latest WASDE report. With gasoline and crude prices on a tear, ethanol blending into gasoline is likely to remain elevated during the coming months driving corn demand.
Sustainable Aviation Fuel (SAF) serves as another source of corn demand in 2024. The Biden Administration is set to release its primary climate model for SAF subsidies under the Inflation Reduction Act in the “very near future”.
While recent reports have stated that the model may be restrictive compared to corn-ethanol industry expectations, the subsidies will undoubtedly drive higher demand for corn-ethanol.
CORN FUTURES CONTANGO IS STEEPENING
Corn Futures term structure has become noticeably steeper over the past three months. Premium for dated contracts have increased. Specifically, corn delivery in later part of 2024 and early 2025 command higher premium.
MARKET METRICS ARE TURNING LESS BEARISH FOR CORN
CME Corn Options positions are currently skewed bullish with a put/call ratio of 0.84. Over the past week, bullish positioning has increased with large call option buildup on June (OZCN4) and December contracts (OZCZ4).
Asset managers have also started to reduce net short positioning on CME Corn Futures since positioning reached its all-time low mid-February.
HYPOTHETICAL TRADE SETUP
South America corn supply remains uncertain even as the US delivers a record harvest. Corn prices will remain bearish in the near term amid ample supplies. Longer term, supply shocks and rising demand has the potential to send corn prices higher. This is evident from steepening contango in CME Corn Futures.
To express the view on corn prices increasing towards the end of the year, traders can establish a calendar spread comprising of short position in September 2024 futures (ZCU2024) and a long position in March 2025 futures (ZCH2025). CME corn futures offer deep liquidity even for contracts in 2025 allowing such calendar spreads to be executed efficiently.
A hypothetical trade setup comprising of the calendar spread consisting of short ZCU2024 and long ZCH2025 also offers margin benefits. The calendar spread position is margin efficient with the entire position requiring margin of just USD 350 as of 15/April/2024.
This position not only benefits from the supply trend but also the seasonal trend in corn prices. Corn prices tend to rise from October through February due to seasonal factors. Between April to September, prices tend to decline. This hypothetical spread is supported by both trends.
• Entry: 1.06185 (ZCH2025/ZCU2024 = 485/456.75 as of 12/April)
• Target: 1.076
• Stop Loss: 1.052
• Profit at Target: USD 323 (Target price = 1.33% higher than Entry => Profit = 1.33% x notional = 1.33% x (485 x Contract Size) = 1.33% x (485 x 5000/100))
• Loss at Stop Loss: USD 225 (Stop level = 0.93% below entry => Loss = 0.93% x notional)
• Reward to Risk: 1.44x
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
TKUK1! trade ideas
CBOT corn lower on good Midwest planting weather outlookChicago Board of Trade corn futures dropped to a one-month low on Tuesday on forecasts for good spring planting weather in the U.S. Midwest that could potentially increase acres planted this spring.
-Concerns about ample supplies and weak U.S. corn export demand added further pressure to prices after a media report said Chinese authorities were seeking to curb some imports.
-CBOT May corn ended 9 cents lower at $4.26-1/2 a bushel after touching its lowest point since March 6.
-Corn was pressured by forecasts for good planting weather in the heart of the U.S. Midwest corn belt later this month following rains this week. Good early season weather tends to support more corn planting.
-The market rallied last week after the U.S. Department of Agriculture (USDA) forecast smaller-than-expected U.S. corn plantings.
-The USDA late on Monday said 2% of the U.S. corn crop was planted as of Sunday, in line with trade estimates.
Just Another Corn Video In today's video I just go over some of my general thoughts about the corn market and some of its current technical and fundamental factors that I believe are driving the market. Hope you enjoy and stay tuned for more! :)
CBOT:ZC1! CBOT_MINI:XC1! AMEX:CORN
Grain Futures Gain GroundGrain futures are higher in the early morning trade as some as headline risk looms into the weekend.
Corn
Technicals (May)
May corn futures are fractionally lower in the early morning trade as prices linger near our pivot pocket from 431 1/2-435, which just happens to be right near the middle of first support and first resistance. We like the upside potential in corn but some of the deferred contracts have a more friendly technical landscape than the May.
Bias: Bullish/Neutral
Resistance: 441 3/4-444 1/2***, 447 1/2-450****
Pivot: 431 1/2-435
Support: 421-422***
Fund Positioning
Friday’s Commitment of Traders report showed that Funds were net sellers of about 8k contracts (through 4/2/24), that puts their net short position at 259,556.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for December corn, using the 5, 10, 15, 20, and 30 year averages.
Technicals (May)
May soybean futures are fractionally higher in the early morning trade. Support from 1170-1175 will continue to be very important for the Bulls to defend through this week's trade. A break and close below could spark another wave of pressure. On the resistance side of things, they want to see a close above resistance from 1198-1205 1/2.
Bias: Neutral/Bullish
Resistance: 1198-1205 1/2***, 1212 3/4-1216***
Pivot: 1187
Support: 1170-1175***, 1161-1167****
Fund Positioning
Friday's Commitment of Traders report showed Funds were net sellers of roughly 3.5k contracts, trimming their net short position to 138,256 contracts.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for November soybeans, using the 5, 10, 15, 20, and 30 year averages.
Wheat
Technicals (May)
Wheat futures broke out above trendline resistance last week which adds to the recent trend of higher highs and higher lows. If the Bulls can achieve a close above resistance from 568 1/2-570 we could see it open the door for an extension towards the psychologically and technically significant $6.00 level.
Bias: Neutral/Bullish
Resistance: 568 1/2-570***, 595 3/4-600***, 608 1/2-611**
Pivot: 550-555
Support: 525**
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for July wheat, using the 5, 10, 15, 20, and 30 year averages. Historically this isn't the most friendly time of year.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Options Blueprint Series: Leveraging Diagonals with Corn FuturesIntroduction to Corn Futures (CBOT)
Corn Futures, central to the commodities market, are traded on the Chicago Board of Trade (CBOT). These futures contracts are standardized agreements to buy or sell 5,000 bushels of corn, providing traders with a mechanism to hedge against price changes or to be exposed to future price movements in the agricultural sector.
Contract Specifications:
Contract Size: 5,000 bushels
Quotation: Cents per bushel
Minimum Tick Size: ¼ cent per bushel, equivalent to $12.50 per contract
Trading Hours: Sunday to Friday, electronic trading from 7:00 PM to 7:45 AM CT, and Monday to Friday, daytime trading from 8:30 AM to 1:20 PM CT
Contract Months: March, May, July, September, December, with additional serial months providing year-round trading opportunities
Margin Requirements: Margins are set by the exchange and can vary, with initial margins typically being a fraction of the contract value to secure a position ($1,300 at the time of this publication)
The liquidity and volume in Corn Futures make them an attractive market for traders. Factors influencing corn prices include weather patterns affecting crop yields, global supply and demand dynamics, and changes in energy prices due to corn's role in ethanol production.
Understanding Diagonal Spreads
Diagonal Spreads are a sophisticated options strategy that involves simultaneously buying and selling options of the same type (either calls or puts) with different strike prices and expiration dates. This approach is designed to leverage the time decay (theta) and volatility differences between contracts, making it particularly suitable for markets with expected directional moves and distinct volatility characteristics, like Corn Futures.
Key Components:
Long Leg: Involves buying an option with a longer expiration date. This option acts as the foundational position, typically chosen to be in-the-money (ITM) to capitalize on intrinsic value while also benefiting from time decay at a slower rate due to its longer duration.
Short Leg: Consists of selling an option with a shorter expiration date and a different strike price, usually out-of-the-money (OTM). This leg generates immediate income from the premium received, which helps offset the cost of the long leg.
Strategic Advantages:
Directional Flexibility: Diagonal spreads can be tailored to bullish or bearish outlooks depending on the selection of calls or puts, strikes and expirations.
Time Decay Harnessing: By selling a shorter-term option, the strategy aims to benefit from the rapid acceleration of time decay on the sold option, improving the position's overall theta.
Given the cyclical nature of the agricultural sector and the specific factors influencing corn prices, diagonal spreads offer a strategic method to trade Corn Futures options. They provide a balance between long-term market views and short-term income generation through premium collection on the short leg.
Application of Diagonal Spreads to Corn Futures
In applying Diagonal Spreads to Corn Futures, we focus on a bearish strategy to capitalize on an anticipated gap fill below the current price level. This strategic choice is driven by the analysis of Corn Futures' price action, indicating potential downward movement. A bearish diagonal spread can be particularly effective in such scenarios, offering the flexibility to benefit from both time decay and directional movement.
Bearish Diagonal Spread Setup:
Long Leg (Buy Put): Select a put option with a longer expiration date to serve as the foundation of your bearish position. Choose a strike price that is at-the-money or in-the-money (ATM/ITM) to ensure intrinsic value.
Short Leg (Sell Put): Sell a put option with a shorter expiration date at a lower strike price that is out-of-the-money (OTM).
Trade Example:
Assumption: Corn Futures are trading at 434 cents per bushel.
Long Put: Buy a 47-day put option with a strike price of 435 cents, paying a premium of 7.49 cents per bushel ($374.5 – point value =$50).
Short Put: Sell a 19-day put option with a strike price of 415 cents, receiving a premium of 1.01 cents per bushel ($50.5 – point value =$50).
As seen on the below screenshot, we are using the CME Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts.
The goal is for Corn Futures to decline towards the 415-cent level (origin of the gap).
Risk Considerations: While diagonal spreads can offer controlled risk (premium paid = 6.48 = 7.49 – 1.01 = $324 – point value =$50) and strategic flexibility, it's crucial to be mindful of the potential for loss, particularly if the market moves sharply in an unintended direction. Employing risk management techniques can help mitigate these risks:
Adjustments and Rolls: Proactively manage the position by adjusting or rolling the short leg to a different strike price or expiration date in response to market movements or changes in volatility. This can help collect additional premium and potentially offset losses on the long leg.
Use of Stop Losses: Implement stop-loss orders based on predefined risk tolerance levels. This could be set as a percentage of the initial investment or based on the technical levels in Corn Futures prices.
Diversification: While not specific to the strategy, diversifying your portfolio beyond just Corn Futures options can help manage overall market risk. Different markets may react differently to the same economic indicators or geopolitical events, spreading your risk exposure.
Regular Monitoring: Given the dynamic nature of Corn Futures and the options market, regular monitoring is crucial. Stay informed about market conditions, news impacting agricultural commodities, and changes in volatility that could affect your position.
Diagonal spreads in Corn Futures offer a strategic avenue for traders looking to exploit market conditions and time decay with a defined risk profile. However, the key to successful implementation lies in diligent risk management, including making informed adjustments, employing diversification, and maintaining a disciplined approach to monitoring and exiting positions.
Conclusion
In this edition of the Options Blueprint Series, we explored the strategic application of Diagonal Spreads to Corn Futures traded on the Chicago Board of Trade (CBOT). This advanced options strategy offers traders a nuanced approach to potentially capitalize on market movements, leveraging the inherent time decay of options to enhance potential returns.
Employing Diagonal Spreads allows traders to express a directional bias—bearish, in our case study—while managing the investment's risk profile through a combination of long-term and short-term options. By buying a longer-dated, in-the-money put and selling a shorter-dated, out-of-the-money put, traders can set up a position that benefits from both the expected downward movement towards a gap fill and the accelerated time decay of the sold option.
However, as with any sophisticated trading strategy, understanding and managing the associated risks is paramount. Directional risks, volatility changes, and the potential for early assignment on the short leg require vigilant management and a readiness to adjust the position as market conditions evolve.
By adhering to disciplined risk management practices—such as making timely adjustments, employing stop losses, and maintaining portfolio diversification—traders can seek to navigate the complexities of the options market and aim for consistent, strategic gains.
The Corn Futures market, with its dynamic price movements influenced by a range of factors from weather to global supply and demand dynamics, provides a fertile ground for applying Diagonal Spreads. Traders who invest the time to understand both the underlying market and the intricacies of this options strategy may find themselves well-positioned to exploit opportunities that arise from market volatility.
In summary, Diagonal Spreads present a strategic option for traders looking to leverage market insights and options mechanics in pursuit of their trading objectives. As always, education and practice are key to mastering these techniques, with paper trading offering a risk-free way to hone one's skills before venturing into live markets.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Are December Corn Futures Set for a Rally to $5.00?December corn futures, often referred to as the “new crop” contract because it is the price for the U.S. crop that is about to get planted. The first crop progress report of the year showed just 2% of the crop is planted in the United States. With the crop hardly in the ground, there are uncertainties around production potential that tend to offer seasonal support to prices.
The seasonal backdrop coupled with a potential shift in momentum through the month of March may offer a good risk/reward trade to the upside. As you can see on the chart 480-485 has been a significant pocket dating back to last May, where it first acted as support. It eventually was the breakdown point on January 12th and has acted as resistance since then. If the market can chew through and achieve consecutive closes above this pocket, we believe it could spark additional upside momentum with the next significant resistance pocket coming in near $5.00 -5.06, which is both technically and psychologically significant. As you can see on the chart this was a congestion zone through the back half of last year and represents the 50% retracement (middle of the range) from last summer’s high to the year’s low. There’s also a small gap at 503 from January 2nd.
Looking at the weekly Commitment of Traders report we see funds holding a net shot position of 259,556 futures/options contracts, this would historically be looked at as a large net short position, especially for this time of year. Closes above technical resistance could spark short covering and add an additional tailwind to the market. A break and close below the recent lows of 460 ¾ would neutralize this bullish bias.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Corn Futures And Improved Energy DemandIn this video I go over my thesis on why I am short term long the corn futures market due to the energy market picking up some positive momentum due to strong manufacturing data coming from the two power houses U.S. and China and how I think this could positively impact the price of corn due to it's use in ethanol. Higher crude oil prices can generally have a positive effect on ethanol prices which can make it's raw material corn more valuable.
Also the technical set up on the 4 hour and 1 hour chart of the break of downtrend looks promising.
CBOT:ZC1! CBOT_MINI:XC1! AMEX:CORN
NYMEX:CL1! NYMEX:MCL1! AMEX:USO
CBOT corn dips after prior-session rally, good US planting weathChicago Board of Trade corn futures fell on Monday as traders took profits after steep gains the prior session and as favorable U.S. weather was seen potentially increasing acres planted this spring with the feed grain.
CBOT May corn settled 6-1/2 cents lower at $4.35-1/2 a bushel. The strongest rally in eight months last Thursday had lifted the benchmark contract to a seven-week peak.
The U.S. Department of Agriculture (USDA) on Thursday pegged U.S. corn planting intentions below trade expectations, but some traders and analysts expect seeded area to rise due to good planting weather in the forecast.
In a weekly report on Monday, the USDA is expected to report U.S. corn planting at 2% complete.
The USDA on Monday morning said export inspections of U.S. corn totaled 1,431,535 metric tons in the week ended March 28, up 14% from a week earlier and up 30% from the same week a year ago.
Can Corn Futures Continue to Rally?Thursday marked the last trading day of the month and first quarter, which coincides with one of the more highly anticipated USDA reports of the year; quarterly stocks and prospective plantings.
The USDA estimates that there will be 90.036 million acres of corn planted in the U.S. this year, that was well below the average analyst estimate of 91.776 million and down sharply from last year’s 94.641 million. Quarterly stocks were reported at 8.347 billion bushels, this was slightly below the average estimate of 8.427 billion, but still well above last year’s 7.396.
With the two headline numbers for corn coming in below expectations, the market responded with a sharply higher trade with the July contract settling 15 ¼ cents higher. As you can see from the chart, corn futures spent much of March attempting to carve out a low and the recent USDA report may aid in that effort. The Bulls still have their work cut out for them though, they will want to see consecutive above our first resistance pocket from 456 ¾-460 ¾. If they can achieve that, we could see additional momentum push prices up near our next resistance pocket from 471-475, which happens to currently coincide with the 100-day moving average.
That momentum could come from new buyers, but also short covering from Funds who are still holding a hefty net short position, to the tune of 245,463 futures and options contracts. From a seasonal standpoint, there’s the potential for uncertainty around weather and its impact on production that could also help prices firm.
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
PBOF ZCMy PBOF chart is an attempt to identify, and be decisive, after a potential bottom has formed through with a good sequential 9 or 13 and triple exhaustion signal. Oscillator divergence and volume are clues to a potential bottom. Regardless they are are hard to bu into real time. But if it appears a bottom has possibly been established then I want to buy the next pullback. To identify that, I am hoping my PBOF chart will be useful. It would shows some indications of a bottom, followed by oversold conditions on fast CCI and RSI oscillators. The price ought to be near the bottom of the bollinger band as well. Triple exhaustion and sequential aren't of use generally once the bottom is in. So now we reduce our focus to these oscillators and the bollinger bands (which become a useful short term volatility indicator at this juncture).
A corn trade inspired me to do design the PBOF chart. Here is our two corn charts (ZS and CORN) that I published as in idea in Tradingview so that they are fixed in time and not updating. If they update then the chart will lose meaning. So it is static. You just have to pull up a later chart and see how it worked out but this conveys the idea.
WHEAT Seasonal Trade! We are coming into WEEKLY Demand on Wheat.
Wait for the "reaction" inside of this demand zone on the 5 minute chart to start going long.
CORN Excellent 4-month buy opportunity.Corn's (ZC1!) price action since the COVID recovery in early 2020 is showcasing an amazing resemblance with the previous full Cycle of 2009 - 2014. This is better illustrated on the 1M (monthly) time-frame. Both started the Bull phase on a roughly +175% rebound on the 17 year Support Zone, topping on a Higher Highs (which was a Bearish Divergence with the Lower Highs of the 1M RSI) and then declined both astonishingly by -51.93%.
This is where the market is at now. In 2014 the price rebounded by +28.78% back above the 1W MA50 marginally and just below the 0.382 Fibonacci retracement level, before resuming the long-term decline to the 17 year Support Zone.
As a result, this presents an excellent 4-month buy opportunity with 506'4 as the Target (+28.78%). Notice also that the 1M RSI is on the exact same level (33.75) as it was on the January 2014 Low, and is reversing.
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Don't spring forward yet on cornWhen the calendar turns to March, gardeners get itchy to plant things. Experience teaches that it's often a good idea to hold off.
The above chart shows that corn traders who were willing to wait until late April 2023 stood a much better chance of profit, both on the long and short sides, than those who jumped in during March. The weather markets of late Spring and early Summer were especially rewarding in both directions.
If the present uptrend pushes May corn above 440, we'll be ready to buy. We won't be surprised if that doesn't happen in March. Until then, we plan to watch and wait.
Corn Bullish butterfly counts as complete.... corn has been taking a beatin......Lets see if we can reverse this market. close in a bullish hammer candle today would be a start,
long cornCorn is touching its 200 WMA and almost its 50 MMA.
RSI is around 20 on the daily and weekly chart.
Could be a turnaround point.
Is A Short-Covering Rally in Corn Imminent? There’s no beating around the bush - the fundamentals for corn remain bearish ahead of Thursday’s USDA report. Last month, USDA caught many by surprise revising ‘23 corn yields to record-highs of 177.3 bushels per acre. Since then, corn futures have continuously grinded lower. But, could a short-covering rally be in the offing soon?
Per the last CFTC Commitments of Traders report, managed money funds have amassed a net-short position of 280,151 contracts (combined futures & options). That represents the largest net-short position in corn since 2019. While corn has continued making new lows, each of the last 4 contract lows have come in conjunction with less and less conviction - namely bullish divergence on the standard 14-day RSI. Moreover, the volume profile has gradually softened since the January USDA report. Thus, it's possible that all of the bears have already sold. The first step in a short-covering rally is getting bears to stop selling - and a friendly WASDE report on Thursday bares the potential to make that happen.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Corn is getting back up- The market has been moving within a bearish channel since the beginning of December 2023, prices are therefore following a bearish trend in the medium term.
- Since the last impact on the bottom of the channel at $436.30, investor appetite has clearly returned, leading the market to a strong rebound. This change in sentiment was also confirmed on the DMI indicator, which now shows strong buying pressure still increasing, within an increasingly directional movement.
Additionally, both the 21- and 34-period exponential moving averages are currently registering a bullish crossover, for the first time since the start of the downtrend.
- The next potential target of $458.10 (38.2% Fibonacci) is currently in sight for the market. That said, the behavior of technical indicators also allows us to envisage an extension of the upward movement outside the bearish channel, towards the 50% Fibonacci at $464.85, with $461.15 as intermediate resistance.
This scenario must however be confirmed by a clear break of $458.10
The information provided does not constitute investment research. The material has no been prepared in accordance with the legal requirements designed to promote the independence of investment research and such is to be considered to be a marketing communication.
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Corn descent: not done yet?If you're looking at corn futures waiting for the price to bottom out, you might have a while longer to wait. Recall that prices didn't firm last year until the end of May.
Yes, prices are lower now, but they've only just breached the high end of the USD3.00-4.50 range where they spent most of their time for several years after 2013.
For now, we'd leave it in the elevator.
Corn To 843’6 In 12-18 Month TimeframeGood luck folks.
I believe what is to come in the near future is creeping upon us. As I sit here and look at what’s around me. The amount of food sitting in stores gives the illusion to be easily deceived. Think of this as a Judas Swing of the entire story and narrative. I pray for the future
Swinging Short On Corn In this video I go over my thesis for swinging short the corn market via Corn Mini Futures. I believe this is a rare and strong indication of lower prices due to the technical, fundamental even sentimental outlook on this market. I believe it is overwhelmingly bearish and sellers have a strong argument for lower prices.
CBOT:ZC1! CBOT_MINI:XC1! AMEX:CORN
How to Quantify & Identify (real-time) a Trading RangeOne of the most challenging & frustrating tasks for a trader,
is to define with a rules-based (systematic) methodology,
and identify (on a real-time basis),
when a market is in a trading range.
Using the MACD-v both of these goals are achieved.
The market is defined as being as "Ranging"
(one of the Core 7 Range Rules/States)
when the MACD-v is between the -50 and 50 ranges,
for more than 25 bars consecutively.
How to define a "Ranging" Market using the MACD-vOne of the most challenging & frustrating tasks for a trader,
is to define with a rules-based (systematic) methodology
and identify on a real-time basis,
when the market is in a trading range.
Using the MACD-v both of these goals are achieved.
The market is defined as being as "Ranging"
(one of the Core 7 Range Rules/States)
when the MACD-v is between the -50 and 50 ranges,
for more than 25 bars consecutively.
🌽 Corn coming at you 🚢Fundamental Data👇
🌽Corn Marketing Year Progress (23/24)
▓▓▓▓░░░░░░░░░░░ 25.61%
Export Inspections 🚢➡️🌎
406,680 Metric Tons (A marketing year low)
⬇️ 194,388 Metric Tons week vs. last week
⬇️ 92,388 Metric Tons this week vs. last week
⬇️ 391,474 Metric Tons this week vs. 5-Year Average This Week
Export Sales🗺️🫰
24,458,454 Metric Tons (Cumulative, Current Marketing Year)
⬆️ 6,708,737 Metric Tons this week vs. this week last year
Price Sentiment (Community Polling)📊
Bullish 🟩🟩🟩⬜️⬜️⬜️⬜️⬜️⬜️⬜️ 24%
Neutral 🟫🟫🟫🟫🟫⬜️⬜️⬜️⬜️⬜️ 50%
Bearish 🟥🟥⬜️⬜️⬜️⬜️⬜️⬜️⬜️⬜️ 19%
Noteworthy News / Trends 🆕
🟢 Marketing year high in export sales was achieved for US Corn
🟢 China has been an active buyer of US grains and oilseeds - Corn, Wheat, Sorghum, and Soybeans
🟢 Corn bids are inverted in many pockets of the Western Corn Belt showing a reflection of the difficulty of purchasing cash corn as well as decent processing margins (Ethanol)
🔴/🟢 Drought is starting to bounce back in the Corn growing states but still better then last year (more important for 2024)
🔴 / 🟢 Funds are now net short the most amount of futures & options since the start of the most recent bull market in Corn (2020)
🔴 No notable *new and increasing* demand on balance sheet that isn’t expected to be exports
🔴 Panama Canal congestion continues to plague logistics increasing freight costs to navigate through the Panama Canal (most of US Corn is exported through the US Gulf and pending destination, may need to use the Panama Canal to get to market)
🔴 Mississippi river levels are at +5 year lows.
🔴 Seasonal builds of ethanol stocks increase from here to February (pressures Ethanol margins)
Fund Net Position💰
Chicago Corn: -206,478 Contracts (Position as of 11/28)
MATIF Corn: -6,450 Contracts (Position as of 11/24)
Corn Commentary 🌽
Corn appears to have been priced just right enough to attract demand with a marketing year high in export sales achieved *prior* to the collapse in futures prices last week. This week we will learn if those low prices incentivized even *more* export demand when the USDA releases export sales figures on Thursday.
Regardless, there is still plenty of Corn out there and it’s becoming even more difficult to move it due to:
1) Low water levels on the Mississippi River
2) Panama Canal congestion due to low water levels.
Both of which are helping attract Corn to be delivered by rail to Mexico and the Pacific Northwest (PNW) for export where destinations in Latin America and Far East Asia do not need to traverse through the Panama Canal.
That’s the current and main story the trade is watching from a domestic point of view, but what lies ahead?
Largely we’re getting ready to discuss planting decisions for *next years crop* and much of that influence will come from what happens in South America regarding weather and politics, both of which are unpredictable but will have an immense impact on the world supply and demand of grains and oilseeds. (Stay tuned and watch our X news feed for the story to develop)
Technicals💹
Corn successfully reversed and broke the downtrend we mentioned last week but failed to settle above it. Regardless, there is now a rangebound trade between 4.70 and 4.93 that can go either way.
We'll note that the technicians will say that resistance could break and Corn could rally significantly, but there is still a +2.15 billion bushel expected carryout out there and would higher prices attract demand or kill it?
Watch the following levels for now👇
🟢 Current Upside Targets: 4.895, 4.9325
🔴 Current Downside Targets: 4.75, 4.705, 4.62
Investment Risk Disclaimer⚠️
This information is provided for informational and educational purposes only and is not intended to constitute investment, financial, legal, tax or accounting advice. The views expressed are those of the author and do not necessarily represent the opinions or advice of our firm. Futures, options, and over-the-counter derivatives involve a high degree of risk and may not be suitable for all investors. Past performance is not indicative of future results.
Investments or strategies mentioned herein may not be suitable for you. The information contained herein does not take into account the particular investment objectives, financial situations, or needs of individual users. Before making any investment decision, you should perform due diligence and consider seeking advice from an independent financial or investment advisor.
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