Going into Friday’s opening, we had some amazing news. Despite the limit down move in corn on Wednesday, after the USDA report, open interest actually grew… That suggests that despite the gap lower formations on the charts, that the funds are holding tight. Seeing that open interest grew between the 390 and 425 highs, you have to wonder at what point they will start to liquidate.
Goldman already came out with a rec to have their customers get out of their corn. The greatest, smartest, most well funded MBA, PhD masters of the universe and they got their clients long at the top, looking at a 70 cent+ hair cut. 70 cents on one contract is a $3,500 dollar loser. My guess is Goldman had on a few thousand contracts. That’s a nice way to start the new year…
In any event, we’ll see if Friday’s sell off sparked a reduction in open interest. Such a reduction would indicate that the losers were getting out.
I have a feeling these guys are waiting to see if 370 holds in March corn. If they haven’t moved with 60 cents of heat, perhaps they will when we roll below 350. I personally thing that is the level which will trigger liquidation, and perhaps a flip to net short.
In the immortal words of Dean Wormer… “Fat, Drunk and Stupid is no way to go through life, son”… Neither is long and wrong…
Have a great long weekend.
