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We hope to see many of you at the Commodity Classroom in Milwaukee, August 11-12. This marketing education course is hosted at a historic hotel in downtown Milwaukee and will cover all aspects of grain marketing including crop insurance and the impacts of the Big Beautiful Bill, a riverboat dinner cruise, and a private suite for the Brewers game. Visit www.CommodityClassroom.com for details.
For a variety of reasons we believe the corn market has the potential to stage a rally. For starters
- Large speculators appear to be done selling this market as well detailed in our weekly COT analysis. Specs had been sellers for 18 of the last 19 weeks, this week were net buyers of ~15,000 contracts, and are sitting near historically large net shorts.
- The production news seems to be about as bearish as it can get. There is talk that traders are penciling in 185+ yields, and based on today’s price that makes sense. Growing season to date and the forecast are about as good as it can get. Surprises will be the other direction.
- Technically, Monday July 14 was a key reversal up. This follows a 30¢ selloff since July 3, and a 70¢ selloff since February.
Long Corn Recommendation
Entry: Buy 2 December corn futures at the market.
Alternative Call Options: Buy Aug SDNC 420 calls for ~7¢. These are 2 cents in the money, so you are giving up 5¢ of profit if the market trades higher, but only risking 7¢ if the market turns lower. These trade off of December futures, and expire on July 25.
Target: A rally back in July futures to the $4.30 gap is step one. Recovery into the $4.30-$4.35 area is certainly reasonable.
Risk Exit: We would recommend exiting on a close under $4.10, or on a straight stop at $4.07.
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Disclaimer: The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Brock Investor Services, Inc 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 is based on the opinion of Brock Investor Services, Inc and 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. There is a risk of losses as well as profits when trading futures and options. This brief statement does not disclose all the risk aspects of derivative trading, therefore careful study carrying FCM’s Risk Disclosure is strongly encouraged before the recipient of this email trades.