Last week December 2012 Corn (new crop) opened at $6.49¾ per bushel and closed the week at $6.93. Now, if you have not heard yet, the U.S. is dealing with a drought. At this point, the Drought of 2012 is not as bad as the Drought of 1988, yet. The 1988 drought was the worst since the 1930s dust bowl, and we saw crop damage come in at $78 billion.
Below you can see the corn Condition from the USDA Crop Progress released yesterday. Look at the Poor and Very Poor columns. These numbers have climbed considerably over the past two weeks. Look at how many states are dealing with 40%-60% in Very Poor and Poor. Look at Kentucky, 72%. There is a point where even if rain comes it may be too late for corn. I have a call into my favorite farmer to find out exactly when that is. Keep in mind that if tomorrow’s WASDE report is bullish, corn prices could hit all time highs. Stay tuned.
Technicals, which at this time takes a backseat to weather, on the daily chart below you see ADX at 67 reflecting a very strong trending market. MACD is bullish and Stochastics are in deep overbought territory. You can see the technical trade set-up showing up on June 18 (see the green line), same time when we saw Producers change from net long to net short.
Proceed to Page 2 for the latest COT Data...
So exactly who is selling corn into the Drought of 2012? To get your answer look at the weekly chart below. In the older, less transparent Legacy report, you can see that Commercials went from 9,902 contracts net long on June 15 to -116,048 net short this past week. In the more transparent Disaggregated report Producers were net short -272,259 contracts on June 15 and Swap Dealers were net long 282,161 contracts (difference 9,902). Managed was net long 47,962 contracts on June 15 and last week were 165,210 contracts net long.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.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.
Proceed to Page 3 for this week's detailed fundementals...
Now we saw temperatures here in Chicago drop, but where is the rain? I do not see much rain in Chicago’s weather forecasts this week. Possible rain this weekend, will it help? I will tweet all of my followers when I hear back from my favorite farmer. Have a prosperous trading week.
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