Commodities have been having a tough time so far this year but it looks like there might be a chance for their luck to change – specifically in corn.
Commitment of Traders data is a great resource for getting a good idea of how various groups of traders are positions in various markets. Typically I like to see how the Commercial Traders (‘smart money’) is positioned, whether that’s net-long or net-short and to what degree. Zooming in on corn we normally see Commercial Traders hold some degree of a net-short position, which makes sense as they try to hedge out some of the risk associated with rising corn prices. Since 2009 there are just four instances where Commercial Traders went net-long – most notably in late 2010 when prices went from $3.40 to $8 and again last year before corn jumped higher.
Looking at the chart of the Teucrium Corn ETF ($CORN) we can see possible support near the $36 level. The intermediate trend line from the August ’12 to June ’13 will be upside resistance if we do see prices appreciate in response to the uptick in Commercial Traders buying up the commodity. I’ll also be watching the Relative Strength Index to see if we can get back above 50 as a possible sign that bulls have once again stepped in to bring momentum back to a bullish range.
Disclaimer: The information contained in this article should not be construed as investment advice, research, or an offer to buy or sell securities. Everything written here is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.
