The information and opinions expressed below are based on my analysis of price behavior and chart activity
December Corn
November 4, 2024 As we start off Election, FOMC and WASDE week, the December Corn contract settled up 2 Cents at 4.16 ½. We did see another test of what seems to be overhead trend line resistance early in the day session, but 4.20 capped the market high today and prices faded lower from there into the end of the session. Export Inspections were reported by the USDA this morning at 574,558 million metric tons, a decline of 204,000 mmt from the previous week and a drop of 0ver 265,000 mmt from two weeks ago. On the surface, that appears to show some slowing demand, in my opinion. However, the current marketing year to date is almost 2,000,000 mmt more than last year, which I believe to be a pretty strong pace. As I mentioned above there are 3 things to potentially move the market this week. Whatever your thoughts about the US election, I am of the opinion that whatever happens, we won’t be over it by Tuesday night or Wednesday morning. Some folks are afraid of excess tariffs igniting a trade war or a sharp move in the US Dollar, depending on results. Personally, I think no matter who “wins”, the lawyers will get their say immediately afterwards and continue to cloud the picture. The FOMC meeting begins Wednesday with an (expected) ¼ point reduction to be announced on Thursday. And Friday morning we’ll get the monthly Supply/Demand and Crop Productions data from the USDA. Any one (or all three) could push the market aggressively, if there’s a surprising result, although I am of the opinion that the Fed is already baked in to most markets. To my eye, the chart above suggests that Corn prices are content to bounce between the trend lines (blue) until something significant happens from a supply/demand POV. My thought is that it will come Friday in the form of the WASDE, but I’m also reluctant to make blanket recommendations, or guessing subsequent price direction, in front if a USDA report. I would advocate for protection against your risk, rather than attempting for a ”home run.” I see trend resistance near today’s high of 4.20 and trend support near 4.04. A close outside of that range should dictate the next trend move. I think that round number support is at 4.00, with resistance above up to the October high @ 4.34 ¼. Crop Progress data indicates that harvest is nearly complete and the photos of huge corn piles that people have sent me re-enforce that notion. We may not get a “record” crop, but national yield trends appear to be quite good. Producers that have unpriced or unprotected bushels in the bin may do well to consider March Put options or option spreads, in order to protect downside risk. On the other hand, if you’re looking to re-own Corn that you’re selling out of the field, I think it might be more prudent to wait, as the March contract seasonal charts that I look at show potential weakness into the first week in December, or so, and December options don’t offer enough time to my liking. Keep in mind that the seasonals are not always 100% correct, as each growing season is different and a supply/demand/election shock can change everything. For specific strategies that are custom tailored to your production and needs, please reach out to us directly at Walsh Trading.
Jefferson Fosse
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