Is all the good news already in the market? Corn futures (CBT.C) have rallied sharply this summer on fears that the Midwest flooding would destroy millions of acres of newly planted corn, and that the resulting short supply would drive prices sharply higher. Did that perception change right before the July Fourth holiday?
Corn futures fell 0.4% on Thursday, July 3rd - the last trading day preceding the Independence day holiday, and were down 1.0% over the last five trading days on that day, settling at $7.46 per bushel. That's not much, but traders may be sensing something much more to come in the way of softness in the market. What does history suggest?
Q: What has happened in the past when, on the last trading day before July Fourth, corn futures are down both for the day and for the week?
A: Over the next four weeks, old crop September corn futures have fallen 85% to 92% of the time. During the same time period, new crop December corn futures have declined 85% of the time.
If you would like to see more details of this historical edge, go to www.markethistory.com
Robert J. O'Brien Jr. is President of County Cork, LLC, a Commodity Trading Advisor (CTA) based in Skokie, Illinois.
