Last week September 2011 corn opened at 653½ and closed at 606¾. The high for the week came in on Wednesday, June 29 at 697 one day before the USDA reported on corn acreage (raised to the second highest since 1944) and corn stocks (much higher than expected). You see the effect these reports can have on the markets. But the question is for how long? Read the detailed fundamental report below to see for yourself.
Looking at the daily chart below you will see that ADX at 22 shows this market to be in a weak trend. MACD is bearish and adding divergence, and Stochastics are oversold. Weak trending markets will not remain overbought or oversold for any length of time. Also, the large gap (no doubt caused by the bearish USDA reports) between the June 30 close and the July 1 open could be filled quicker than later. Look at the daily chart to see when Trends in Futures issued a sell recommendation.
Proceed to Page 2 for the latest COT Data...
COT Data
Looking at the weekly chart below, you can see the Commercials from the legacy COT report went from -337,635 contracts net-short on June 24 to -259,398 contracts net-short on July 1. That is a liquidation of 78,237 contracts. This also weakened corn. You can see how in the legacy report Commercials liquidated, as did the Large Specs. For a more transparent view of big money, look at the new disaggregated COT report. It shows that not only Managed Money is liquidating, but so are the Swap Dealers. And Producers are liquidating their shorts. At this point I will have to agree with the fundamentals and say this is a bull market correction. Watch to see if the move down builds strength. You can see this with a rising ADX.
|
Commodity |
12-mo low |
12-mo hi |
1-Jul |
24-Jun |
|
Cattle (feed) |
-1,290 |
7,100 |
4,562 |
5,543 |
|
Cattle (live) |
-73,179 |
10,437 |
10,437 |
10,032 |
|
Hogs |
-35,979 |
21,270 |
7,670 |
13,313 |
|
Corn |
-413,915 |
66,274 |
-259,398 |
-337,635 |
|
Oats |
-7,738 |
-2,034 |
-4,254 |
-4,693 |
|
Soybeans |
-203,260 |
29,118 |
-4,840 |
-73,101 |
|
Soybean meal |
-90,487 |
-16,395 |
-16,395 |
-45,483 |
|
Soybean oil |
-117,444 |
32,394 |
-21,599 |
-56,208 |
|
Wheat |
-32,577 |
61,768 |
46,115 |
46,058 |
|
Orange juice |
-20,631 |
-6,588 |
-20,631 |
-20,414 |
|
Coffee |
-47,729 |
-8,333 |
-8,333 |
-9,428 |
|
Cocoa |
-41,808 |
8,586 |
-14,794 |
-10,222 |
|
Sugar |
-221,694 |
-104,595 |
-161,193 |
-157,143 |
|
Cotton |
-69,857 |
-12,970 |
-28,032 |
-30,857 |
|
British pound |
-66,435 |
49,738 |
21,696 |
10,590 |
|
Canada dollar |
-115,190 |
-13,109 |
-18,130 |
-27,651 |
|
Euro FX |
-124,855 |
50,392 |
-43,346 |
-40,691 |
|
Japanese yen |
-52,533 |
76,983 |
-3,573 |
-32,091 |
|
Swiss franc |
-42,387 |
5,110 |
-23,279 |
-24,958 |
|
US dollar index |
-20,849 |
14,003 |
-17,535 |
-9,490 |
|
Mexican Peso |
-140,414 |
-14,488 |
-50,195 |
-44,999 |
|
Australian dollar |
-110,025 |
-10,793 |
-55,863 |
-67,183 |
|
S&P 500 |
-88,893 |
33,981 |
-29,292 |
-27,768 |
|
T-note -10 yr |
-74,761 |
229,611 |
120,672 |
62,146 |
|
T-bond -30 yr |
-43,324 |
88,803 |
49,545 |
32,930 |
|
Eurodollar |
-1,179,414 |
81,781 |
-225,214 |
-306,094 |
|
Crude oil |
-319,669 |
-25,439 |
-156,419 |
-177,978 |
|
Heating oil |
-66,097 |
7,568 |
-27,916 |
-37,953 |
|
RBOB Gasoline |
-85,987 |
-10,453 |
-56,344 |
-59,008 |
|
Natural gas |
108,160 |
228,910 |
142,635 |
128,964 |
|
Copper |
-36,201 |
1,793 |
-5,788 |
-6,647 |
|
Gold |
-302,740 |
-193,197 |
-208,755 |
-251,247 |
|
Platinum |
-34,909 |
-15,759 |
-18,670 |
-23,062 |
|
Silver |
-65,413 |
-29,166 |
-29,166 |
-35,564 |
Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.
Proceed to Page 3 for this week's detailed fundementals charts...
Fundamentals
Corn prices sank to a 3-1/2 month low as they extended their downward correction from last month’s all-time nearest-futures high of $7.9975 a bushel.
Bearish factors include:
- The USDA’s unexpected June 30 hike in its U.S. corn acreage estimate to 92.282 million acres, the second largest planted crop since 1944.
- Reduced corn demand by livestock producers that left quarterly U.S. corn inventories on June 1 at 3.67 billion bu, higher than estimates of 3.29 billion bu.
- The USDA’s May 11 cut in its 2012 U.S. corn export forecast to 1.8 billion bu, a nine-year low, as record high prices erode foreign demand.
Bullish factors include:
- A deterioration of the corn crop after the USDA’s weekly crop conditions showed the U.S. corn crop 68% good-to-excellent condition as of June 26, down two points from the prior week.
- The USDA’s June 9 cut in its 2011-12 U.S. carry-over estimate to a 15-year low 695 million bu. from a May estimate of 900 million, and the cut in its global corn carry-over estimate for 2011-12 to 111.89 MMT from a May estimate of 129.14 MMT.
- IGC’s prediction that global corn inventories will fall to 111 MMT in 2011/12, or about 13% of consumption, the smallest stocks-to-use ratio since 1974.
Weekly Corn Exports (week ended June 23): 655.2 MT; 2009/10 (September-August) cumulative exports are -4.7% y/y.
Fundamental outlook — Bull market correction — Corn prices plunged after the USDA raised its U.S. corn acreage estimates. Price declines may be limited, though, after the USDA cut its U.S. corn production and its carry-over estimates because of flooding. The 2011-12 corn stocks/use ratios are extremely tight with the U.S. stocks/use ratio at a record low of 5.2% and the world stocks/use ratio at a tight 12.8%.
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