Medium term
Trade view / 15 June 2017 at 7:51 GMT

Corn has chance of improvement

Managing Partner / Spotlight Group
United Kingdom
Instrument: ZCN7
Price target: 391.37
Market price: 377.50

It has been a dreadful year in the commodities space as the Thomson Reuters Jefferies Commodity Research Bureau Index has fallen 8.30% over the past 12 months.

Many agricultural commodities have been slumping since the end of 2011, and the only active way to trade them with consistent profits has been to be fleet of foot and adopt a short-term “pick and go” approach. The alternative has been dull and relied on running a long-term, almost perpetual short that has required constant rolls of the contract.

There may be a break in this approach as there is something of a consensus for near-term rebounds in the corn price as measured by FocusEconomics. They see it rising by $0.09/bushel, month-on-month to reach $4.02/bushel, as measured on a quarter-average basis for the October-to-December period.
Corn Source:, Spotlight Ideas 

Corn futures are expected to rise further on projections of lower global inventories in the short and medium term and a weaker harvest in the US based on dryness in the western corn belt.

Certainly one must be cautious, and a change in the Midwest weather has taken prices off the local high, but is this the end of the corn rally? A clearer picture can be found in the National Oceanic and Atmospheric Administration's vegetation health change from last year.

The situation has changed year-over-year. The drought conditions that affect corn are represented in the Dakotas, Iowa, southern Minnesota and central Illinois. Given that last year saw a record national average yield at 174.6 bushels per acre, one must expect this year will be lower.
US Weather Source: National Oceanic and Atmospheric Administration (NOAA)

The current US Department of Agriculture yield estimate is not far off, at 170.7 bushels/acre, but the current two-week forecast, while a degree wetter than in recent weeks, may prove insufficient to repair the soil damage already done. That would make it very hard to hit the USDA's yield and production estimates.

Corn 6-year chart
Source:, Spotlight Ideas

Management and risk:

Parameters: Corn futures - July17 (ZCN7)

Entry: Buy at 377.50 USc/bushel at 1814 GMT (on June 14)

Targets: 383.10 ... 386.26 ... 388.82 ... 391.37

Stop: 360

Time horizon: Medium term

— Edited by John Acher

Non-independent investment research disclaimer applies. Read more
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SierraPt. SierraPt.
Steven, thank you for sharing! Why you suggest buying July contracts when you horizon is medium term?
Stephen Pope Stephen Pope
I like to buy the front month then roll as needed. Greater price action is found in the front month.
vanita vanita
Dear Steve,
View on eurusd after fed ?
And what's yours target on this pair for medium term.
Take care Steve.
Stephen Pope Stephen Pope
Dear Vanita,

EURUSD is a tricky pair as the technical picture is a muddle. Shortest & longest measures all say BUY; the middle ground says sell!

The Dollar has slipped lower against other major currencies on Friday morning & so has backed away from recent high as the market awaits fresh economic data due later in the day.

The Euro had a temporary lift against the Dollar when the IMF & EZ finance ministers backed a payout of €8.5 Billion to Greece so that it can avoid a default in July & avert another debt crisis. So...once again the Euro gains because reality is kicked down the road.

I think talk of the ECB removing its accommodation sooner as against later is just wishful thinking. That may suit Germany but not many other EZ nations would welcome such a policy change. But the US seems to lurch from softer data to more political problems each & every day.

The chart I have attached show technical levels and at the moment I see EURUSD moving higher with scope to 1.1282
vanita vanita
Thanks very much Steve.
Take care.
Stephen, hi. Do you still believe in this idea?
Stephen Pope Stephen Pope
I will keep it running for stop is at 360.

The technical outlook is mixed, certainly the very near term is not so positive but further out it has better prospects.
Thanks for your response Stephen.
SierraPt. SierraPt.
Steve, can you please explain how do you deal with intermediary targets. In this example corn reached first target 383, but you didn't raise your stop - why?
Stephen Pope Stephen Pope
I would usually do that but have been distracted in the past few days with domestic issues.


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