I looked at corn a few days ago, pulling up the chart of the Teucrium Corn ETF (CORN) as well as some interesting charts from the USDA. Two of the analysts at Ned Davis Research were recently quoted in a Barron’s article as they looked at previous 20%+ moves in the crop and the resulting price action.
From Barron’s:
“[C]orn traders are shifting their focus away from the severity of the drought, saying the corn crop is developed enough that it has already suffered most of the damage it will sustain from the hot and dry weather,” writes Dow Jones Newswires’ Owen Fletcher this morning. “Traders say some market participants may already be exiting bets on corn towait for the U.S. Department of Agriculture on Aug. 10 to issue its newest supply-and-demand report, which is expected to include a revised forecast forthe corn crop’s yield.”
About the “history” mentioned a few moments ago: This is according to Ned Davis Research’s Warren Pies and John LaForge, who looked at 20%-or-greater one-month increases in corn prices. A year out from price spikes, prices aren’t much different. They’re range-bound, and tend to fall a bit as the fifth or six month approaches, they find.
Commercial traders have gotten back to a net short position since June, Pies and LaForge also note. This should tell us a thing or two. “This, like most of the other evidence we point to, does not mean corn’s move is done, but it does indicate that the ‘easy money’ has already been made,” they write.
So Pies and LaForge feel the ‘easy money’ has already been made in corn, which probably isn’t a stretch considering the corn ETF is up approx. 40% in a little over 2 months. Traders will be watching that August 10th USDA crop report for further insight into the awful crop season we have had.
Source: Corn Rally: Enough is Enough
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