Corn Approaching A Major Low?

jklondon

Active member
212 2
ig corn

I cant see any Corn Options on IG ? Missing something here. Can see the future prices - or am I really looking at the options :-|
 

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DaveT

Well-known member
434 6
jklondon -

If you have read this thread so far you will know that IG quote commodity options , but don't list them online - you have to phone through for the spreads - contract and bet details are in the dealing guide (download from site)
 

DaveT

Well-known member
434 6
CORN AND GRAINS - fundamentals -

there are 2 factors that jolt this market in the short-term, IMO

1) Aug 12th monthly Supply/Demand report - first indication of crop size and yield potential. Anything less that 10.8 Bn bushels for corn could be construed as bullish, as the market has been pricing in 11 bn + crop size.

2) There is a persistant cool airstream setting up across the US Corn Belt. Crops lack heat units (disappointing yield?) and could be susceptible to frost scares/actual damage in a few weeks time. There are already fears for the Canola crop up north in Canada.

Don't regard this crop as 'made and in the bin' just yet....
 

Moneycat

Member
75 0
I have made some seasonal studies based on December expiration.

It seems that there is a tendency to make a minor bottom, by mid-august; a bounce follows, before new lows are reached around expiration.

A chart and free raw data available for download from my site.
 

DaveT

Well-known member
434 6
Thanks Moneycat for that observation.

The big CROP REPORT came out today - CORN est. 10.9 bn bushels, a record. This was above trade expectations, and has sent the futures down to retest their recent lows.

However, this support level represents a four year uptrend on the monthly charts, and could hold. Obviously if it doesn't , look out below!

I'm following the March 05 chart (as I have march 250 call options). Note the BULLISH MOMENTUM DIVERGENCE (RSI) , which hints that the market may not be as weak as it looks.

We could be in the process of forming a long-term double bottom on the daily charts.

See chart attatched :
 

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DaveT

Well-known member
434 6
Thought I'd add my weekly chart analysis :

1) Long-term trendline support

2) RSI BULLISH DIVERGENCE APPEARING

3) 50% Retracement of Decline = 275

See chart :
 

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Moneycat

Member
75 0
Your point of view is compatible with my seasonal analysis as posted on my site.

The seasonal chart clearly shows that the bearish potential, althought not exhausted, is quite low.
 

minx

Well-known member
328 10
I got a bit concerned that we couldn't close above the 1.61 Fib level and then we fell quite quickly. As the first 3 days of these falls seem to be quite rapid (see wheat, cotton, etc.. on their falls, retrace and further falls) followed by a period of indecision I'll be very interested to see what happens today. I was a bit unimpressed by the retrace in corn yesterday especially as wheat and oats managed to hold more of their decline......
Like I said, todays first couple of hours should be interesting....
 

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DaveT

Well-known member
434 6
As I expected, Corn held the previous lows and has now formed a clear double bottom on the daily charts.

See Mar05 chart:
 

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DaveT

Well-known member
434 6
Breakout of the double bottom pattern today - to be confirmed tomorrow?

The pattern suggests 260 (basis March 05 futures) as first objective.

Next objective = 278-283 gap = 50% retracement.
 

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DaveT

Well-known member
434 6
Corn chart continues to look constructive to the bull case henceforth.

A BIG clue as to the bottoming was the bullish divergence on the RSI chart, IMO.

Nice double bottom formed, then support holding,.

Fundamental factors include early frost concerns and the re-emergence of China/other demand issues. After August closes, Demand should move to the fore in terms of pricing influence.

On the following chart, I've shown my buy points (where I have accumulated March 250 call options). I'm long via a Spread-bet ,the equivalent of 10 contracts (options)
 

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DaveT

Well-known member
434 6
Here is an interesting article on CORN (and Soybean) Fundamentals.

It includes a study on the potential effect on the market of an early frost, (in terms of how much production could be lost,etc.) and gives some price projections.

The key thing to remember, fundamentally, (frost or no frost) is that even with a record crop this year, projected world and domestic usage leaves the Supply/Demand Balance Sheet still relatively tight.

No room for the unexpected....

http://www.agriculture.com/default....articletoarticle__Aarticle_html___381___12666


Futher comments/opinions welcome. :)
 

bgold

Established member
532 5
twalker said:
U.S. Selling Wheat at Pace Not Seen for Six Years
USAgNet - 08/23/2004
More than 11 million metric tons of U.S. wheat have been exported or contracted for in the first 73 days of the 2004/05 marketing year, a pace not seen since 1997.
http://www.wisconsinagconnection.com/story-national.cfm?Id=882&yr=2004

Interesting article. How does the high exports affect wheat prices? Less domestic supply ==> higher prices? Or, producers keen to sell as they expect lower prices in (near) future?

I would agree all of the above that corn is near a major low but still expect another low below the recent double bottom. My preferred wave count is still more or less as in attached chart (eg prices are in wave 4 correction). Using an alternative count I can see wave going as high as 275, while there is of course also the bullish scenario (in a wave 3) also taking prices initially to 265-75.

However, seasonally Corn has been weak in next 4 weeks 14 of past 15 years. Yesterdays' harami / inside day may be a forewarning and IMHO doesn't strenghten the bull case.

If I were long, I would start taking profits.

As I am flat, i think a setup for short is developing:
Short entry 239, target sub 225, stop 246'ish.
 

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TWI

Senior member
2,536 254
High export is definitely bullish as it relates directly to demand side of equation with assumed fixed supply.
 
 
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