Anybody got an opinion on this? Open interest in the active month is 783K contracts. Seems well above the historical normal. Trying to figure if higher demand for the contract is bullish or bearish. I'm thinking its farmer's locking in these higher prices right before harvest & speculators obliging them. On the other hand it could be speculators eying the high wheat prices and making bets in various directions with corn. FYI: I'm new to the softs, but exp with hard commodities. Your thoughts appreciated.
1) You would expect open interest in December to be "large" during this time of the year. 2) Aggressive buying, more so than "higher" demand, is bullish. 3) You have to consider the participation of commercial users of corn in addition to growers and speculators. They are the ones who really "move" the market. 4) Corn may benefit from the "coat tail effect" with wheat. 5) Let's see if the September crop report can put a "lid" on the market and the expected harvest decline can occur. If the market keeps rallying then, it would be indicatve of enormous underlying strength.
Explains the great short trade in the Sept. / Dec. calendar spread. Stevie Wonder saw that one coming.
I think a better question would be: Why is Dec Corn making new highs right before one of the biggest corn harvests in the world? It's probably because all the end users are nice and like farmers to get a good price for their corn crop.
High Open interest confirms a trend higher. Hedge funds are buying into the trend, end producers a buying to protect against price increase, speculators are buyers. The only sellers you have a farmers hedging against price depreciation.