Bearish side fundamentals are getting thin now.  These include the Ukraine and Argentina holding large inventories of corn at values under U.S. posted prices and private forecasters are starting to come out with their projections for this year’s planted acres.  One forecaster last week projected 89.2 million acres to be planted versus 88.0 last year. However bullish side fundamentals are starting to service now as the new crop year is yet to be planted.  China imported record high corn in 2015 at much higher prices and now looks to replace it with purchasing corn at a much cheaper value.  Russia is planning to cut wheat export taxes and put it on corn making their prices less competitive.  Last week Chinese buyers ordered 1.2 million metric tons of corn for the first three months delivery in 2016.  We look for many of the new orders to shift to U.S. ports.  Trend following funds last week came in short the market with 203,000 contracts with noncommercial and non-reportable funds short 109K.  Their short positions are largely supported by old crop bearish news as the late March intention report will give us a fresh outlook to new crop acres.  Speculative funds carrying these huge short positions may soon find there is less risk in being neutral in the market than being short, leaving them to cover aggressively.

With this in mind I offer two courses of action, one in futures and one in options. For a speculative trade in futures look at buying the July/December 2016 corn futures spread at 11.4 under. This spread has been range bound in recent weeks. Traders should use a tight stop here at negative 15 under, risking 3.4 cents or 175.00 on the trade plus all commissions and fees. Those looking long term for upside exposure in corn should consider this options trade. Look at buying the December 16 corn 450 call while selling 2 Dec Corn 590 calls for 7 cents or in cash value $350.00 plus all commissions and fees.

For those interested in grains, Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Link for next week’s webinar is below. If you cannot attend live, a recording will be sent to your email upon signup. Or please contact me at anytime at slusk@walshtrading.com

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RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.