Grains Oilseeds

[bratby]

CORN – Low Risk Trade?

Grain markets are coming into the most volatile and trending part of the year as the first crop ratings on the American growing season appear. Fundamentally Soybeans and Corn have contrasting fortunes as ending stock projections diverge between to the two. Whilst adverse weather through the summer would undoubtedly provide bullish fuel to both, it is Corn that is has the most favorable set-up on both a fundamental and technical basis. Whilst the entire bean complex has broken its final support points in the past two weeks, corn has been trapped in one of its tightest ranges in decades.

Analysis of the the last 10- years December Corn contract shows that lowest range for the contract is a Dollar, and with nearly half the year gone the current range is only 25 cents. It would be highly unusual if that range was not to be expanded. With prices historically depressed Funds and Manged Money have one of there largest ever short positions. Against this, Unreported positions have there biggest long. Whilst it is unwise to to use these tools to project price action, what should be remembered is often the limits of participation change, so shorts can get bigger, as can longs. What is clear is a technical breakout higher would lead to fund short covering with there hand forced if price stayed above the 200 day moving average. Further upward momentum would come if Funds then got long.

Thus far Corn has been subject to planting delays and replants which will see acreage fall for it and rise for Beans, but modern technology means that it easy for these delays to be recovered. What cannot be escaped is the fact that these late plantings will mature in what is potentially a hotter part of the summer, with two of the largest producing States among the highest affected.

Corn Techncial Outlook
From a Technical prospective this period of sideways betrays the increasing bullish nature that is appearing. A glance at major market used Moving Averages (50,100,200) shows that they are at there most condensed value in many years.

Get Full Institutional technical Analysis and Charts HERE >>>>