Often we see corn hit a low around Thanksgiving and then move up into the end of the year. Will history repeat itself this year?
In last week’s shortened trading week, we saw March 2013 corn open at $7.30¼ per bushel and close the week at $7.49¾, and yes it was a low volume week.
On the daily chart of corn we see ADX rising now at 23.5. This is telling us strength is developing, but this is not yet a strong trending market. Once ADX gets over 25 and the price action breaks over $7.60, then we will see the strong trend develop. DI Differential was at zero on Nov. 19. MACD is adding divergence from above the signal line and is looking to cross over the zero on the histogram, which would be bullish. And Stochastics are in overbought territory. Because this is not yet a strong trend, we need to know we could see a correction down from $7.60.
Proceed to Page 2 for the latest COT Data...
COT Data
On the weekly chart, we see a strengthening bullish posture by big money in corn. Producers increased their net shorts from -379,283 contracts to -412,075 contracts. Managed Money increased their net longs from 237,406 contracts to 271,173 contracts.
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...
So what about last week? Looking at the weekly chart, you can see that in the week of Nov. 22, 2010 a low was hit at $5.06¼. On the first trading day of 2011 we saw corn open at $6.26¼. That was a move of $1.20 or $6,000 per contract. Now in the week of Nov. 21, we saw a low of $5.80¼ and on the first trading day of 2012 corn opened at $6.62, not as big as the move in 2010, but still good for $4,000 per contract. This past week we saw a low of $7.26¼, which is much higher than the past two years.
So, where will corn open on the first trading day of 2013? Could we see an open close to or above $8.00? We will have to see what WASDE says on Dec. 11. We will want to watch plantings in South America and of course their growing season. We also will want to keep an eye on U.S. exports, especially to China. And remember the recent drop we saw in corn was caused by harvest pressure, which has now subsided.
So if we see a bullish WASDE in the second week of January 2013 and issues with the South American growing season, corn does not have that much further to go to hit $10, or to get close. This would be an all-time high in corn. And one other item, if the U.S. dollar starts to weaken, that will help bring up corn prices. Of course, if the U.S. dollar strengthens, that will put pressure on corn prices. So stay tuned into corn’s price action. We will have to see where corn opens 2013.
Have a prosperous trading week.
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