Subject: CORN – What does HISTORY tell us
Since the 2006 low, there have been 16 times nearby corn traded below 335 and 2 times it touched there.
Out of those 16 occurrences, only 5 closed below 335, the other 11 spiked below and closed above 335
Out of those 5 times that it closed below 335, only one time closed below 335 for more than a few weeks. That made up for 2 of the 5 closes below 335.
2007 had 2 monthly closes below 335 at 325’6 and 324 followed by a close at 373 the following month
The other 3 times the market closed below 335 one month but closed above 335 on the next monthly in 2014 = 376’6, 2016 = 336’6, while 2009 experience 3 times it traded below 335 but only one close below. The other 2 months traded below 335 but closed at 339’4 and 344
Thus out of the 16 times nearby futures traded or closed below 335, there are 8 times our eyes see trading below 335. Here are the highs that traded within a 6 month period of making the low:
Obviously this implies that corn bought at 335 and lower is a money maker. Downside risk is limited to the extreme lows of 300. An average rally from this level would project nearby futures well above 400.
Major things impacting the timing of the low:
Timing – of when people start to return to work. Expect a regional re-entry once regional numbers have spread the stress on med facilities
China – they are buying. Beef and Pork are #1, feed #2
Dollar – Trillions of cash injections could be bearish the dollar depending on other country recovery potential
Ethanol – how big of losses and how soon will the industry restructure. Gov’t subsidies?
OPEC – when does world settle on a plan to reduce production and energy markets post a low.
Given the epic situation we are facing, I asked out team to comment on these facts. Here are some responses:
I cannot say the lows are in yet, but I also think a target of 3.80 July or 3.90 Dec is not unreasonable to achieve.
I think 2016 is the at-risk year to look at
1737 carried in and 2293 carried out
We have two Black Swans that both medicine and energy experts do not agree on how this works out.
We all hope for sooner, but that is hope only at this point.
Without the Black Swans $3.25 for CZ low may very well have been in play as a reasonable low.
New York’s Covid-19 rate of growth is the new all-time leader above even that of Madrid.
I think a buyer has time.
AgMarket is recommending to buy calls on current weakness in order to be in better position to sell corn/beans on a price bounce. This will leave you in a position whereby your call would participate in an extended rally as history suggest. But if this year does not follow history, the sale you make protects you. Everyone is different, call your representative and get orders in