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What can Corn Look Forward to in 2018?

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What can Corn Look Forward to in 2018?

Dec 28, 2017

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

The corn market has been depressed (and frankly depressing to watch)for some time as the market wrestles with the idea that we produced a record national average corn yield in a year that was far from what is conventionally seen as perfect. The drought monitor, vegetation index and crop conditions reports were all showing issues but in the end we had another great crop. So, now that we are buried in corn again (still) what is there to look forward to in 2018?

The year 2017 was a very difficult year to market for producers. There were lots of signs pointing to a sub par corn crop. The drought monitor was the worst looking one we have seen since 2012 (nowhere near as bad however). Maybe the most misleading of all were the NASS crop conditions that for most of the growing seasonhad this year’s corn crop tracking closely to 2013, a year where national average yield came in about 4% below trend line yield. It’s hard to imagine all of this was so wrong.

This leads us to the most depressing thought of all… Has corn gotten to the point where big yields are almost a given? If this is true we really do not have much reason to put any weather premium into the market at the start of a growing season and the market may stop paying any mind to less than perfect weather. While this debate may take years to fully figure out, the market will likely take any weather concerns with a healthy dose of skepticism this year.

They’re here! We have complimentary 2018 commodity reference calendars available. They are a little bigger than pocket sized and very useful if you follow markets. You can sign up for yours here – http://www.zaner.com/offers/calendar.asp (Shipping to the US only)

However, there are some positives out there too… Ones that are for the most part flying under the radar right now because of the massive corn supply. But, domestic corn demand for feed and ethanol are red hot right now. Animals on feed continue to grow with cheep feed and (at least according to the stock market) a healthy economy. This trend is also starting to expand globally and protein and ethanol exports are showing signs ofgetting stronger.

Actual export shipments of corn are not great however. As of today we are still well behind the pace needed to hit the USDA’s projected target. Trade disputes continue to be a concern and there is a lot of global export competition at the moment. However, the Argentinean growing season is a question mark with La Nina still in the forecast and Brazil may not be as aggressive planting their second season corn crop this year with prices being low. So, it is possible that US corn exports will pick up in months to come.

In a market that has been under pressure for a long time, after 4 years of record national average corn yields producing mountains of corn it is difficult to see a bright side. And there may not be a bright side in the short term. But, in the long run we are building the demand base needed to support such large corn crops.A lower US$ could become more of a factor as well. It will be interesting to see how we follow up last year’s surprisingly good crop, and it will be interesting to see if in 2018 corn can find a bright spot.

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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried – (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Follow me on twitter @thetedspread if you like.

 

March Corn Daily chart:

JanuarySoybeans Daily chart:

MarchWheat Dailychart:

Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION’S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE’S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.

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