Short term
Trade view / 15 July 2016 at 11:55 GMT

Corn has lost its pop

Managing Partner / Spotlight Group
United Kingdom
Instrument: ZCU6
Price target:
Market price:

Grain markets are now trading on the latest actual weather and the forecasts. This is now a market dominated by weather models.

Current weather conditions for the majority of the corn belt are quite good in the near term, but a serious topic to consider is a high-pressure ridge forecasted to appear over the US Midwest toward the end of the month, bringing with it hot, dry weather for corn and soybeans.

Now of course forecasts that extend out over a week are not always reliable This can be seen by the fact that the main weather models are in disagreement, markets remain jittery and this has driven price volatility. Markets will continue to swing wildly with every change in the forecast.

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Source:,  Spotlight Ideas

Another negative for corn is that as the wheat harvest finishes up, it appears the crop will prove to be larger and in better condition than initially expected.

This strong supply of wheat will likely be a challenge for the corn market as the two grains compete for storage space.

The sentiment in the storage market is that on a one-year projection wheat will make a 50 cents profit per bushel. It is seen that wheat pays more in storage returns that corn.

One has to also consider the impact of external supplies as in southern Brazil, farmers are expected to increase their full-season corn acreage for the first time in a decade. Of course they have to be sure of the finances of all this as corn is more expensive to plant than soybeans, so it remains to be seen just how much the full-season corn acreage will expand in southern Brazil.

All the time-based technicals are marked as strong sell and so I will open a short position for a short-term play.

Corn (five-year):
Source: Spotlight Ideas

Parameters (corn September 2016 (ZCU6) US cents/bushel)

Entry: sell 356.75 (11:54 BST)

Targets: 352.06... 344.84... 338.25.

Stop: 385.00.

Time horizon: short-term.

— Edited by Michael McKenna

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