US corn is heading into harvest. So where is price headed?

COT Data

Looking at the weekly chart below you will see that from the old COT Legacy report that commercials went from -295,685 contracts net-short on Sept.9 to -274,034 contracts net-short. See the weekly chart to see why you need to view the new Disaggregated report.

So over the past five years exactly what has happened to corn in September?

2010 open 424¾ close 495¾
2009 open 325 close 344
2008 open 560¼ close 487½
2007 open 327½ close 373
2006 open 231½ close 262½

Don't count on ever seeing corn trade $2.00-$3.00 again. I would be extremely shocked if that were to happen.

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 fell to a one-month low and are nearly $1 a bushel below June's all-time nearest-futures high of $7.9975.

Bearish factors include:

1. USDA's Sept. 12 cut in its U.S. corn export forecast to a 13-year low of 1.65 billion bushels from an August estimate of 1.75 billion bushels.
2. USDA's Sept. 12 hike in its 2011/12 global carry-over estimate to 117.39 MMT from an August estimate of 114.53 MMT.
3. Improved crop conditions with 53% of the U.S. corn crop in good-to-excellent condition as of Sept. 11, up +1 pt w/w.
4. Reduced corn demand by livestock producers, which left quarterly U.S. corn inventories on June 1 at 3.67 billion bushels, higher than estimates of 3.29 billion bushels.

Bullish factors include:

1. USDA's Sept. 12 cut in its U.S. corn production estimate for this year to 12.497 billion bushels. from an August estimate of 12.914 billion as it cut its yield estimate to a five-year low of 148.1 bushels per acre from 153 estimated in Aug.
2. Tight supplies after the USDA's Sept. 12 cut in its 2011-12 U.S. carry-over estimate to a 15-year low of 672 mln bushels from 714 mln estimated last month.
3. 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 Sept. 8): 484.9 MT; 2011/12 (September- August) cumulative exports –55% y/y.

Fundamental outlook — Bull market correction — Corn prices fell back as the USDA reduced its demand forecast and raised its global carry-over estimates. On the bullish side, the USDA cut its U.S. and global production estimates and cut its U.S. carry-over estimate to a 15-year low. Corn 2011-12 stocks/use ratios are very tight with the United States at 5.3% and the world at 13.6%.

Have a prosperous trading week.

To see my market views daily you can follow me on Twitter at http://twitter.com/TrendsinFutures.